CAMBRIDGE, ON, Aug. 16, 2017 /CNW/ - ATS Automation Tooling
Systems Inc. (TSX: ATA) ("ATS" or the "Company") today
reported financial results for the three months ended July 2, 2017.
First Quarter Summary
- First quarter revenues were $264.0
million, 1% lower than a year ago.
- First quarter earnings from operations were $21.3 million (8% operating margin), compared to
$22.6 million (9% operating margin) a
year ago. First quarter adjusted earnings from
operations1 were $26.3
million (10% margin), compared to $27.9 million (11% margin) a year ago.
- First quarter EBITDA1 was $30.2 million (11% margin), compared to
$31.5 million (12% margin) a year
ago.
- First quarter earnings per share were 12
cents basic and diluted compared to 13 cents basic and diluted a year ago. First
quarter adjusted basic earnings per share1 were
16 cents compared to 17 cents in the first quarter a year ago.
- First quarter Order Bookings were $266
million, an 11% increase from the first quarter of fiscal
2017.
- Period end Order Backlog was a record $683 million, 12% higher than the first quarter
of fiscal 2017.
- The Company's balance sheet and financial capacity to support
growth remained strong, with unutilized credit facilities of
$638.1 million.
- Subsequent to the first quarter, the Company amended its
$750 million senior secured credit
facility to extend the agreement by three years to August 29, 2021.
- The Company has developed a three-part value creation strategy:
Build, Grow and Expand, to drive the creation of long-term
sustainable shareholder value. See "Strategic Framework".
1
Non-IFRS measure: see "Notice to Reader: Non-IFRS Measures and
Additional IFRS Measures".
|
Financial
Results
|
|
|
|
3 months
ended
July 2,
2017
|
3 months
ended
July 3, 2016
|
Revenues
|
$
|
264.0
|
$
|
265.4
|
Earnings from
operations
|
$
|
21.3
|
$
|
22.6
|
Adjusted earnings
from operations1
|
$
|
26.3
|
$
|
27.9
|
EBITDA1
|
$
|
30.2
|
$
|
31.5
|
Net
income
|
$
|
11.5
|
$
|
12.1
|
Adjusted basic
earnings per share1
|
$
|
0.16
|
$
|
0.17
|
Basic and diluted
earnings per share
|
$
|
0.12
|
$
|
0.13
|
1 Non-IFRS
measure: see "Notice to Reader: Non-IFRS Measures and Additional
IFRS Measures".
|
"Our first quarter operating performance featured year over year
growth in Order Bookings and sequential margin improvement," said
Andrew Hider, Chief Executive
Officer. "While we are focused on running the business, we have
made good progress on the implementation of new processes with the
goal of taking ATS's performance to the next level. We have a
clear strategic framework designed to build on our foundation, grow
our core and expand our reach with the goal of creating long-term
sustainable shareholder value."
First Quarter Summary
Fiscal 2018 first quarter
revenues were 1% lower than in the corresponding period a year ago.
Foreign exchange rate changes positively impacted the translation
of revenues earned by foreign-based subsidiaries compared to the
corresponding period a year ago, reflecting the weakening of the
Canadian dollar relative to the U.S. dollar and Euro.
By market, fiscal 2018 first quarter revenues from consumer
products & electronics increased 2% compared to the
corresponding period a year ago. Revenues generated in the energy
market decreased 67% primarily due to lower Order Backlog entering
the first quarter of fiscal 2018 compared to a year ago. Revenues
in the life sciences market increased 26%, primarily reflecting
higher Order Backlog entering the first quarter of fiscal 2018
compared to a year ago. Transportation revenues increased 25%
compared to a year ago primarily due to higher Order Backlog
entering the first quarter of fiscal 2018.
Fiscal 2018 first quarter earnings from operations were
$21.3 million (8% operating margin)
compared to $22.6 million (9%
operating margin) in the first quarter of fiscal 2017. First
quarter fiscal 2018 earnings from operations included $5.0 million related to amortization of
identifiable intangible assets recorded on the acquisitions of PA,
IWK and sortimat. Included in first quarter fiscal 2017 earnings
from operations was $5.3 million
related to amortization of identifiable intangible assets recorded
on the acquisitions of PA, IWK and sortimat. Excluding these
items, first quarter fiscal 2018 adjusted earnings from operations
were $26.3 million (10% margin),
compared to adjusted earnings from operations of $27.9 million (11% margin) a year ago. Lower
adjusted earnings from operations primarily reflected higher
selling, general and administrative expenses compared to a year
ago, partially offset by an improved gross margin in the first
quarter of fiscal 2018.
Depreciation and amortization expense was $8.9 million in the first quarter of fiscal 2018
and in the first quarter of fiscal 2017.
EBITDA was $30.2 million (11%
EBITDA margin) in the first quarter of fiscal 2018 compared to
$31.5 million (12% EBITDA margin) in
the first quarter of fiscal 2017.
Order Bookings
First quarter fiscal 2018 Order
Bookings were $266 million, an 11%
increase from the first quarter of fiscal 2017. By customer market,
higher Order Bookings in the consumer products & electronics,
energy and life sciences markets were partially offset by lower
order bookings in the transportation market. 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
Wednesday August 16, 2017, 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 by
dialing (416) 849-0833 and entering passcode 66247293 followed by
the number sign.
Annual Shareholders' Meeting
The Company will host its
annual meeting of shareholders at 10:00
a.m. eastern on Thursday, August 17,
2017 at the TMX Broadcast Centre, The Exchange Tower, 130
King Street West, Toronto
Ontario.
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 23
manufacturing facilities and over 50 offices in North America, Europe, Southeast
Asia and China.
Management's Discussion and Analysis
For the Quarter
Ended July 2, 2017
This Management's Discussion and Analysis ("MD&A") for
the three months ended July 2, 2017
(first quarter of fiscal 2018) is as of August 15, 2017 and provides information on the
operating activities, performance and financial position of ATS
Automation Tooling Systems Inc. ("ATS" or the "Company") and should
be read in conjunction with the unaudited interim condensed
consolidated financial statements of the Company for the first
quarter of fiscal 2018, which have been prepared in accordance with
International Financial Reporting Standards ("IFRS") and are
reported in Canadian dollars. The Company assumes that the
reader of this MD&A has access to, and has read, the audited
consolidated financial statements prepared in accordance with IFRS
and the MD&A of the Company for the year ended March 31, 2017 (fiscal 2017), and, accordingly,
the purpose of this document is to provide a fiscal 2018 first
quarter update to the information contained in the fiscal 2017
MD&A. Additional information is contained in the
Company's filings with Canadian securities regulators, including
its Annual Information Form, found on SEDAR at www.sedar.com and on
the Company's website at www.atsautomation.com.
Notice to Reader: Non-IFRS Measures and Additional IFRS
Measures
Throughout this document management uses certain
non-IFRS measures to evaluate the performance of the Company.
These terms do not have any standardized meaning prescribed within
IFRS and therefore may not be comparable to similar measures
presented by other companies. The terms "operating margin",
"EBITDA", "EBITDA margin", "adjusted net income", "adjusted
earnings from operations", "adjusted basic earnings per share",
"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 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 is defined as adjusted net income on a basic per
share basis, where adjusted net income 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 (including adjusted net income) 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, and (ii) adjusted earnings from operations to earnings
from operations, adjusted net income to net income and adjusted
basic earnings per share to basic earnings per share, in each case
for the three-month periods ending July 2,
2017 and July 3, 2016, 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-month periods ending July 2,
2017 and July 3, 2016 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 23 manufacturing facilities and over 50 offices in North America, Europe, Southeast
Asia and China.
Strategic Framework
To drive the creation of long-term
sustainable shareholder value, the Company has developed a
framework for a three-part value creation strategy: Build, Grow and
Expand.
Build: To build on the Company's foundation and drive
performance improvements, management is focused on strategic
initiatives, such as the launch of the ATS Business Model, the
implementation and measurement of value drivers and key performance
indicators, a revised strategic planning process, succession
planning and talent management, advancing employee engagement and
driving autonomy and accountability into its businesses.
Grow: To drive growth, management is focused on strategic
initiatives such as growing organically through the development and
implementation of growth tools under our ATS Business Model,
providing innovation and value to the Company's customers and
markets, and growing the Company's recurring revenue model.
Expand: To expand the Company's reach, management is
focused on strategic initiatives such as the development of new
markets and business platforms, expansion of its service offerings,
investing in innovation and product development, and making
strategic and disciplined acquisitions that strengthen ATS'
business.
OVERVIEW –
OPERATING RESULTS
Consolidated Revenues (In millions of dollars)
|
|
|
|
|
Three
Months
|
Three
Months
|
|
Ended
|
Ended
|
Revenues by
market
|
July 2,
2017
|
July 3,
2016
|
Consumer products
& electronics
|
$
|
36.7
|
$
|
36.0
|
Energy
|
|
21.7
|
|
65.3
|
Life
sciences
|
|
119.1
|
|
94.7
|
Transportation
|
|
86.5
|
|
69.4
|
Total
revenues
|
$
|
264.0
|
$
|
265.4
|
Fiscal 2018 first quarter revenues were 1% lower than in the
corresponding period a year ago. Foreign exchange rate changes
positively impacted the translation of revenues earned by
foreign-based subsidiaries compared to the corresponding period a
year ago, reflecting the weakening of the Canadian dollar relative
to the U.S. dollar and Euro.
By market, fiscal 2018 first quarter revenues from consumer
products & electronics increased 2% compared to the
corresponding period a year ago. Revenues generated in the energy
market decreased 67% primarily due to lower Order Backlog entering
the first quarter of fiscal 2018 compared to a year ago. Revenues
in the life sciences market increased 26%, primarily reflecting
higher Order Backlog entering the first quarter of fiscal 2018
compared to a year ago. Transportation revenues increased 25%
compared to a year ago primarily due to higher Order Backlog
entering the first quarter of fiscal 2018.
Consolidated
Operating Results (In millions of dollars)
|
|
|
|
|
|
|
|
|
|
|
Three
Months
|
Three
Months
|
|
Ended
|
Ended
|
|
July 2,
2017
|
July 3,
2016
|
Earnings from
operations
|
$
|
21.3
|
$
|
22.6
|
Amortization of
acquisition-related intangible assets
|
|
5.0
|
|
5.3
|
Adjusted earnings
from operations1
|
$
|
26.3
|
$
|
27.9
|
1 See
"Notice to Reader: Non-IFRS Measures and Additional IFRS
Measures."
|
|
|
|
Three
Months
|
Three
Months
|
|
Ended
|
Ended
|
|
July 2,
2017
|
July 3,
2016
|
Earnings from
operations
|
$
|
21.3
|
$
|
22.6
|
Depreciation and
amortization
|
|
8.9
|
|
8.9
|
EBITDA2
|
$
|
30.2
|
$
|
31.5
|
2 See
"Notice to Reader: Non-IFRS Measures and Additional IFRS
Measures."
|
|
|
|
|
Fiscal 2018 first quarter earnings from operations were
$21.3 million (8% operating margin)
compared to $22.6 million (9%
operating margin) in the first quarter of fiscal 2017. First
quarter fiscal 2018 earnings from operations included $5.0 million related to amortization of
identifiable intangible assets recorded on the acquisitions of PA,
IWK and sortimat. Included in first quarter fiscal 2017 earnings
from operations was $5.3 million
related to amortization of identifiable intangible assets recorded
on the acquisitions of PA, IWK and sortimat. Excluding these
items, first quarter fiscal 2018 adjusted earnings from operations
were $26.3 million (10% margin),
compared to adjusted earnings from operations of $27.9 million (11% margin) a year ago. Lower
adjusted earnings from operations primarily reflected higher
selling, general and administrative expenses compared to a year
ago, partially offset by an improved gross margin in the first
quarter of fiscal 2018.
Depreciation and amortization expense was $8.9 million in the first quarter of fiscal 2018
and in the first quarter of fiscal 2017.
EBITDA was $30.2 million (11%
EBITDA margin) in the first quarter of fiscal 2018 compared to
$31.5 million (12% EBITDA margin) in
the first quarter of fiscal 2017.
Order Bookings by Quarter
First quarter fiscal 2018
Order Bookings were $266 million, an
11% increase from the first quarter of fiscal 2017. By customer
market, higher Order Bookings in the consumer products &
electronics, energy and life sciences markets were partially offset
by lower order bookings in the transportation market. Foreign
exchange rate changes positively impacted the translation of Order
Bookings from foreign-based ATS subsidiaries compared to the
corresponding period a year ago.
Order Backlog
Continuity
|
|
|
|
|
(In millions of
dollars)
|
|
|
|
|
|
Three
Months
|
Three
Months
|
|
Ended
|
Ended
|
|
July 2,
2017
|
July 3,
2016
|
Opening Order
Backlog
|
$
|
681
|
$
|
652
|
Revenues
|
|
(264)
|
|
(265)
|
Order
Bookings
|
|
266
|
|
239
|
Order Backlog
adjustments1
|
|
––
|
|
(16)
|
Total
|
$
|
683
|
$
|
610
|
1 Order
Backlog adjustments include foreign exchange adjustments and
cancellations.
|
Order Backlog by
Market
|
|
|
|
|
(In millions of
dollars)
|
|
|
|
|
|
|
|
|
|
As
at
|
July 2,
2017
|
July 3,
2016
|
Consumer products
& electronics
|
$
|
55
|
$
|
71
|
Energy
|
|
107
|
|
134
|
Life
sciences
|
|
353
|
|
224
|
Transportation
|
|
168
|
|
181
|
Total
|
$
|
683
|
$
|
610
|
At July 2, 2017, Order Backlog was
a record $683 million, 12% higher
than at July 3, 2016. Higher
Order Backlog in the life sciences market was partially offset by
lower Order Backlog in the consumer products & electronics,
energy and transportation markets. Foreign exchange rate changes
also positively impacted the translation of Order Backlog from
foreign-based ATS subsidiaries compared to first quarter fiscal
2017.
Outlook
The global economic environment has shown some
recent signs of improvement; however, geopolitical risks remain.
Economic growth in the U.S., Canadian and European economies has
been slow. Economic growth in China and other parts of Asia has decelerated. 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.
Funnel activity (which includes customer requests for proposal
and ATS identified customer opportunities) in life sciences has
remained strong and funnel activity in the transportation market is
solid with opportunities in new technologies. Activity in energy
markets is sporadic, but the funnel contains meaningful
opportunities. Funnel activity in the consumer products &
electronics market has improved; however, it remains low relative
to other customer markets. Overall, the Company's funnel
remains significant; however, conversion of opportunities into
Order Bookings is variable as customers are cautious in their
approach to capital investment.
The Company has made progress on the implementation of new
business processes and initiatives with the goal of improving
operating performance and driving growth. As part of this
undertaking, the Company has launched the ATS Business Model
("ABM") which is a set of tools that the Company will utilize in
pursuing its strategies, including driving continuous improvement
in operations and generating growth. Management expects that the
ABM will provide the Company with a competitive advantage in
delivering value to its customers.
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
$683 million at the end of the first
quarter of fiscal 2018 to partially mitigate the impact of volatile
Order Bookings on revenues in the short term. In the second quarter
of fiscal 2018, management expects Order Backlog conversion to be
in the 40% to 45% range. The expected conversion rate is based on
current programs in Order Backlog and management's estimate of
revenues from new Order Bookings in the quarter.
The Company's efforts to expand its after-sales service offering
is expected to provide some balance to the capital expenditure
cycle of its customers. However, the intended ramp-up of the
Company's after-sales service revenues may not offset capital
spending volatility in the short term.
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
|
|
|
|
|
(In millions of
dollars, except per share data)
|
|
|
|
|
|
Three
Months
|
Three
Months
|
|
Ended
|
Ended
|
|
July 2,
2017
|
July 3,
2016
|
Revenues
|
$
|
264.0
|
$
|
265.4
|
Cost of
revenues
|
|
197.2
|
|
200.6
|
Selling, general and
administrative
|
|
44.3
|
|
41.3
|
Stock-based
compensation
|
|
1.2
|
|
0.9
|
Earnings from
operations
|
$
|
21.3
|
$
|
22.6
|
Net finance
costs
|
$
|
6.2
|
$
|
6.6
|
Provision for income
taxes
|
|
3.6
|
|
3.9
|
Net
income
|
$
|
11.5
|
$
|
12.1
|
Basic and diluted
earnings per share
|
$
|
0.12
|
$
|
0.13
|
Revenues. At $264.0
million, consolidated revenues for the first quarter of
fiscal 2018 were $1.4 million, or 1%,
lower than the corresponding period a year ago (see "Overview –
Operating Results").
Cost of revenues. At $197.2
million, first quarter fiscal 2018 cost of revenues
decreased compared to the corresponding period a year ago by
$3.4 million, or 2%. At 25%, gross
margin in the first quarter of fiscal 2018 increased 1% from the
corresponding period a year ago, due primarily to improved program
execution and utilization.
Selling, general and administrative ("SG&A")
expenses. SG&A expenses for the first quarter of
fiscal 2018 were $44.3 million, which
included $5.0 million of amortization
costs related to the amortization of identifiable intangible assets
recorded on the acquisitions of PA, IWK and sortimat.
SG&A expenses for the first quarter of fiscal 2017 were
$41.3 million, which included
$5.3 million of amortization costs
related to the amortization of identifiable intangible assets
recorded on the acquisitions of PA, IWK and sortimat.
Excluding these costs, SG&A expenses were $39.3 million in the first quarter of fiscal
2018, up from $36.0 million a year
ago. Higher SG&A expenses in the first quarter of fiscal 2018
primarily reflected increased employee costs and 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.
Stock-based compensation. Stock-based compensation
expense amounted to $1.2 million in
the first quarter of fiscal 2018 compared to $0.9 million in the corresponding period a year
ago. The increase in stock-based compensation costs is
attributable to higher expenses from the revaluation of deferred
stock units and restricted share units, which was partially offset
by lower expenses from stock options.
Earnings from operations. For the first quarter
ended July 2, 2017, consolidated
earnings from operations were $21.3
million (8% operating margin), compared to earnings from
operations of $22.6 million (9%
operating margin) in the corresponding period a year ago (see
"Overview – Operating Results").
Net finance costs. Net finance costs were
$6.2 million in the first quarter of
fiscal 2018, $0.4 million lower than
in the corresponding period a year ago. The decrease was
primarily due to higher interest income earned in the first quarter
of fiscal 2018 compared to the corresponding period a year ago.
Income tax provision. For the three months ended
July 2, 2017, the Company's effective
income tax rate of 24% differed from the combined Canadian basic
federal and provincial income tax rate of 27% primarily due to
income earned in certain jurisdictions with different statutory tax
rates. The Company expects its effective tax rate to remain
in the range of 25%.
Net income. Fiscal 2018 first quarter net income was
$11.5 million (12 cents per share basic and diluted) compared to
$12.1 million (13 cents per share basic and diluted) for the
first quarter of fiscal 2017. Adjusted basic earnings per
share were 16 cents in the first
quarter of fiscal 2018 compared to 17
cents for the first quarter of fiscal 2017 (see
"Reconciliation of Non-IFRS Measures to IFRS Measures").
Reconciliation of Non-IFRS Measures to IFRS
Measures
(In millions of dollars, except per share data)
The following table reconciles EBITDA to the most directly
comparable IFRS measure (net income):
|
Three
Months
|
Three
Months
|
|
Ended
|
Ended
|
|
July 2,
2017
|
July 3,
2016
|
EBITDA
|
$
|
30.2
|
$
|
31.5
|
Less: depreciation
and amortization expense
|
|
8.9
|
|
8.9
|
Earnings from
operations
|
$
|
21.3
|
$
|
22.6
|
Less: net finance
costs
|
|
6.2
|
|
6.6
|
Provision for income
taxes
|
|
3.6
|
|
3.9
|
Net
income
|
$
|
11.5
|
$
|
12.1
|
The following table reconciles adjusted earnings from operations
and adjusted basic earnings per share to the most directly
comparable IFRS measure (net income and basic earnings per share,
respectively):
|
Three Months Ended
July 2, 2017
|
Three Months
Ended July 3, 2016
|
|
IFRS
|
Adjustments
|
Adjusted
(non-IFRS)
|
IFRS
|
Adjustments
|
Adjusted
(non-IFRS)
|
Earnings from
operations
|
$
|
21.3
|
$
|
––
|
$
|
21.3
|
$
|
22.6
|
$
|
––
|
$
|
22.6
|
Amortization of
acquisition-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
related intangible
assets
|
|
––
|
|
5.0
|
|
5.0
|
|
––
|
|
5.3
|
|
5.3
|
|
$
|
21.3
|
$
|
5.0
|
$
|
26.3
|
$
|
22.6
|
$
|
5.3
|
$
|
27.9
|
Less: net finance
costs
|
$
|
6.2
|
$
|
––
|
$
|
6.2
|
$
|
6.6
|
$
|
––
|
$
|
6.6
|
Income before
income
taxes
|
$
|
15.1
|
$
|
5.0
|
$
|
20.1
|
$
|
16.0
|
$
|
5.3
|
$
|
21.3
|
Provision for income
taxes
|
$
|
3.6
|
$
|
––
|
$
|
3.6
|
$
|
3.9
|
$
|
––
|
$
|
3.9
|
Adjustment to
provision for
|
|
|
|
|
|
|
|
|
|
|
|
|
|
income
taxes1
|
|
––
|
|
1.6
|
|
1.6
|
|
––
|
|
1.6
|
|
1.6
|
|
$
|
3.6
|
$
|
1.6
|
$
|
5.2
|
$
|
3.9
|
$
|
1.6
|
$
|
5.5
|
Net
income
|
$
|
11.5
|
$
|
3.4
|
$
|
14.9
|
$
|
12.1
|
$
|
3.7
|
$
|
15.8
|
Basic earnings per
share
|
$
|
0.12
|
$
|
0.04
|
$
|
0.16
|
$
|
0.13
|
$
|
0.04
|
$
|
0.17
|
1
Adjustments to provision for income taxes relate to the income tax
effects of adjustment items that are excluded for the purposes of
calculating non-IFRS based adjusted net income.
|
LIQUIDITY, CASH
FLOW AND FINANCIAL RESOURCES
|
|
|
|
|
(In millions of
dollars, except ratios)
|
|
|
|
|
|
|
|
|
|
As at
|
July 2,
2017
|
March 31,
2017
|
Cash and cash
equivalents
|
$
|
279.4
|
$
|
286.7
|
Debt-to-equity
ratio
|
|
0.50:1
|
|
0.52:1
|
|
|
|
|
|
For the three months
ended
|
July 2,
2017
|
July 3,
2016
|
Cash flows provided
by (used in) operating activities
|
$
|
(3.4)
|
$
|
57.5
|
At July 2, 2017, the Company had
cash and cash equivalents of $279.4
million compared to $286.7
million at March 31,
2017. At July 2, 2017, the
Company's debt-to-total equity ratio was 0.50:1.
At July 2, 2017, the Company had
$638.1 million of unutilized
multipurpose credit, including letters of credit, available under
existing credit facilities and an additional $2.5 million available under letter of credit
facilities.
In the three months ended July 2,
2017, cash flows used in operating activities were
$3.4 million ($57.5 million provided by operating activities in
the first quarter a year ago). The decrease in operating cash
flows related primarily to the timing of investments in non-cash
working capital in certain customer programs.
In the first quarter of fiscal 2018, the Company's investment in
non-cash working capital increased by $25.9
million from March 31,
2017. Accounts receivable increased 14%, or $23.8 million, driven by the timing of billings
on certain customer contracts. Net contracts in progress
decreased 44%, or $21.1 million,
compared to March 31, 2017. 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 $4.6 million,
primarily due to the timing of inventory purchases. Deposits
and prepaid assets increased 48%, or $7.7
million, compared to March 31,
2017 due to the timing of program execution. Accounts
payable and accrued liabilities decreased 6%, or $11.8 million, compared to March 31, 2017. Provisions increased 6%, or
$0.9 million, compared to
March 31, 2017.
Capital expenditures totalled $3.3
million in the first quarter of fiscal 2018, primarily
related to computer hardware and production equipment.
Intangible assets expenditures were $0.9
million for the first three months of fiscal 2018, and
primarily related to computer software and various internal
development projects.
The Company's U.S. $250.0 million
aggregate principal amount of 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. 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. Transaction fees of $7.2
million were deferred and are being amortized over the term
of the Senior Notes.
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 July 2, 2017, the Company had utilized
$116.7 million under the Credit
Facility by way of letters of credit (March
31, 2017 - $115.0
million). Subsequent to the three months ended
July 2, 2017, the Company amended its
Credit Facility to extend the agreement by three years to mature on
August 29, 2021.
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 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
July 2, 2017, all of the covenants
were met.
The Company has additional credit facilities available of
$8.1 million (3.1 million Euros, 75.0
million Indian Rupees, 50.0 million
Thai Baht and 1.0 million Czech Koruna). The total
amount outstanding on these facilities at July 2, 2017 was $3.3
million, of which $1.0 million
was classified as bank indebtedness (March
31, 2017 - $1.4 million) and
$2.3 million was classified as
long-term debt (March 31, 2017 -
$2.6 million). The interest
rates applicable to the credit facilities range from 1.66% to 9.18%
per annum. A portion of the long-term debt is secured by
certain assets of the Company. The 75.0 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
|
|
|
|
$
|
10.0
|
|
$
|
89.0
|
One – two
years
|
|
|
|
|
8.0
|
|
|
6.3
|
Two – three
years
|
|
|
|
|
6.9
|
|
|
0.6
|
Three – four
years
|
|
|
|
|
5.9
|
|
|
––
|
Four – five
years
|
|
|
|
|
4.3
|
|
|
––
|
Due in over five
years
|
|
|
|
|
0.9
|
|
|
––
|
|
|
|
|
$
|
36.0
|
|
$
|
95.9
|
The Company's off-balance sheet arrangements consist of purchase
obligations and various operating lease financing arrangements
related primarily to facilities and equipment that were 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
July 2, 2017, the total value of
outstanding letters of credit was approximately $137.4 million (March 31,
2017 - $136.0 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. The Company is also exposed to credit risk from its
customers. Substantially all of the Company's trade accounts
receivable are due from customers in a variety of industries and,
as such, are subject to normal credit risks from their respective
industries. The Company regularly monitors customers for
changes in credit risk. The Company does not believe that any
single market or geographic region represents significant credit
risk. Credit risk concentration, with respect to trade
receivables, is mitigated as the Company primarily serves large,
multinational customers and obtains insurance in certain
instances.
During the first quarter of fiscal 2018, 23,250 stock options
were exercised. At August 15,
2017 the total number of shares outstanding was 93,625,276
and there were 2,351,374 stock options outstanding to acquire
common shares of the Company.
Related Party Transactions
The Company has an agreement with a shareholder, Mason Capital
Management, LLC ("Mason Capital"), pursuant to which Mason Capital
has agreed to provide ATS with ongoing strategic and capital
markets advisory services for an annual fee of U.S. $0.5 million. As part of the agreement, a
member of the Company's Board of Directors who is associated with
Mason Capital has waived any fees to which he may have otherwise
been entitled for serving as a member of the Board of Directors or
as a member of any committee of the Board of Directors.
There were no other significant related party transactions
during the first quarter of fiscal 2018.
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
Euros into Canadian dollars. The Company will receive
interest of 6.501% Canadian per annum and pay interest of 5.094%
Euros. 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.
$2 million per annum from the coupon
rate of the Senior Notes.
In addition, from time to time, the Company may hedge the
foreign exchange risk arising from foreign currency debt,
intercompany loans, net investments in foreign-based subsidiaries
and committed acquisitions through the use of forward foreign
exchange contracts or other non-derivative financial
instruments. The Company uses hedging as a risk management
tool, not to speculate.
Period average
exchange rates in CDN$
|
|
|
|
|
|
|
|
|
Three Months
Ended
|
|
|
July 2,
2017
|
July 3,
2016
|
% change
|
U.S.
Dollar
|
1.346
|
1.288
|
4.5%
|
Euro
|
1.480
|
1.455
|
1.7%
|
CONSOLIDATED
QUARTERLY RESULTS (In millions of dollars, except per share
amounts)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Q1
|
Q4
|
Q3
|
Q2
|
Q1
|
Q4
|
Q3
|
Q2
|
|
2018
|
2017
|
2017
|
2017
|
2017
|
2016
|
2016
|
2016
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenues
|
$
|
264.0
|
$
|
265.7
|
$
|
237.4
|
$
|
242.5
|
$
|
265.4
|
$
|
246.8
|
$
|
274.9
|
$
|
263.7
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings from
operations
|
$
|
21.3
|
$
|
16.8
|
$
|
15.3
|
$
|
17.3
|
$
|
22.6
|
$
|
8.1
|
$
|
26.8
|
$
|
24.4
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted earnings
from operations
|
$
|
26.3
|
$
|
24.5
|
$
|
22.5
|
$
|
22.3
|
$
|
27.9
|
$
|
23.2
|
$
|
32.1
|
$
|
31.7
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
income
|
$
|
11.5
|
$
|
7.8
|
$
|
6.6
|
$
|
8.5
|
$
|
12.1
|
$
|
1.4
|
$
|
15.5
|
$
|
12.8
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic and diluted
earnings per share
|
$
|
0.12
|
$
|
0.08
|
$
|
0.07
|
$
|
0.09
|
$
|
0.13
|
$
|
0.02
|
$
|
0.16
|
$
|
0.14
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted basic
earnings per share
|
$
|
0.16
|
$
|
0.15
|
$
|
0.12
|
$
|
0.13
|
$
|
0.17
|
$
|
0.14
|
$
|
0.21
|
$
|
0.19
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Order
Bookings
|
$
|
266.0
|
$
|
322.0
|
$
|
284.0
|
$
|
289.0
|
$
|
239.0
|
$
|
390.0
|
$
|
228.0
|
$
|
230.0
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Order
Backlog
|
$
|
683.0
|
$
|
681.0
|
$
|
632.0
|
$
|
654.0
|
$
|
610.0
|
$
|
652.0
|
$
|
546.0
|
$
|
589.0
|
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 and 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 interim condensed 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 interim condensed consolidated financial statements were
prepared. Existing circumstances and assumptions about future
developments may change due to market changes or circumstances
arising beyond the control of the Company. Such changes are
reflected in the estimates as they occur. There have been no
material changes to the critical accounting estimates described in
the Company's fiscal 2017 MD&A.
CONTROLS AND PROCEDURES
The Chief Executive Officer
("CEO") and the Chief Financial Officer ("CFO") are responsible for
establishing and maintaining disclosure controls and procedures and
internal controls over financial reporting for the Company.
The control framework used in the design of disclosure controls and
procedures and internal control over financial reporting is the
"Internal Control - Integrated Framework (2013)" issued by the
Committee of Sponsoring Organizations of the Treadway Commission
("COSO").
Management, including the CEO and CFO, does not expect that the
Company's disclosure controls or internal controls over financial
reporting will prevent or detect all errors and all fraud or will
be effective under all potential future conditions. A control
system is subject to inherent limitations and, no matter how well
designed and operated, can provide only reasonable, not absolute,
assurance that the control system's objectives will be met.
During the three months ended July 2,
2017, there have been no changes in the design of the
Company's internal controls over financial reporting that have
materially affected, or are reasonably likely to materially affect,
the Company's internal controls over financial reporting.
Note to Readers: Forward-Looking Statements
This news
release and management's discussion and analysis of financial
conditions, and results of operations of ATS contains certain
statements that may constitute forward-looking information within
the meaning of applicable securities laws ("forward-looking
statements"). Such forward-looking statements involve known
and unknown risks, uncertainties and other factors that may cause
the actual results, performance or achievements of ATS, or
developments in ATS' business or in its industry, to differ
materially from the anticipated results, performance, achievements
or developments expressed or implied by such forward-looking
statements. Forward-looking statements include all disclosure
regarding possible events, conditions or results of operations that
is based on assumptions about future economic conditions and
courses of action. Forward-looking statements may also
include, without limitation, any statement relating to future
events, conditions or circumstances. ATS cautions you not to place
undue reliance upon any such forward-looking statements, which
speak only as of the date they are made. Forward-looking
statements relate to, among other things: the strategic framework;
conversion of opportunities into Order Bookings; potential impact
of general economic environment, including impact on Order Bookings
and volatility of Order Bookings; the expected benefits where the
company engages with customers on enterprise-type solutions and the
potential impact on Order Bookings, performance period, and timing
of revenue recognition; the Company's Order Backlog partially
mitigating the impact of volatile Order Bookings; Order Backlog
conversion; launch of the ATS Business Model ("ABM") and the
expected impact; the Company's efforts to expand after-sales
services and the expected impact; the Company's strategy to expand
organically and through acquisition; the Company's expectation with
respect to effective tax rate; the Company's goal with respect to
non-cash working capital as a percentage of revenues; expectation
in relation to meeting funding requirements for investments;
potential to use 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 an interest rate
swap. 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 some or all of the sales
funnel is not converted to Order Bookings due to competitive
factors or failure to meet customer needs; timing of customer
decisions related to large enterprise programs and potential for
greater negative impact associated with any cancellations or
non-performance in relation thereto; variations in the amount of
Order Backlog completed in any given quarter; that the ABM is not
implemented effectively, not adopted on the desired scale by the
business, or that its impact is other than as expected; that
revenues from after-sales services are insufficient to offset
capital spending volatility; 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; risk that the ultimate outcome of lawsuits, claims, and
contingencies give rise to material liabilities for which no
provisions have been recorded; that one or more customers, or other
entities with which the Company has contracted, experience
insolvency or bankruptcy with resulting delays, costs or losses to
the Company; political, labour or supplier disruptions; the
development of superior or alternative technologies to those
developed by ATS; the success of competitors with greater capital
and resources in exploiting their technology; market risk for
developing technologies; risks relating to legal proceedings to
which ATS is or may become a party; exposure to product liability
claims; risks associated with greater than anticipated tax
liabilities or expenses; and other risks detailed from time to time
in ATS' filings with Canadian provincial securities
regulators. Forward-looking statements are based on
management's current plans, estimates, projections, beliefs and
opinions, and other than as required by applicable securities laws,
ATS does not undertake any obligation to update forward-looking
statements should assumptions related to these plans, estimates,
projections, beliefs and opinions change.
ATS AUTOMATION
TOOLING SYSTEMS INC.
|
Interim
Consolidated Statements of Financial Position
|
(in thousands of
Canadian dollars - unaudited)
|
|
|
|
|
|
|
|
|
|
|
July
2
|
March 31
|
As
at
|
Note
|
|
2017
|
2017
|
|
|
|
|
|
|
|
ASSETS
|
9
|
|
|
|
|
|
Current
assets
|
|
|
|
|
|
|
Cash and cash
equivalents
|
|
|
$
|
279,358
|
$
|
286,697
|
Accounts
receivable
|
|
|
|
189,900
|
|
166,069
|
Costs and earnings in
excess of billings
|
|
|
|
|
|
|
|
on contracts in
progress
|
4
|
|
|
132,991
|
|
144,708
|
Inventories
|
4
|
|
|
52,607
|
|
47,981
|
Deposits, prepaids
and other assets
|
5
|
|
|
23,842
|
|
16,119
|
|
|
|
|
678,698
|
|
661,574
|
Non-current
assets
|
|
|
|
|
|
|
Property, plant and
equipment
|
|
|
|
70,750
|
|
69,233
|
Other
assets
|
6
|
|
|
4,221
|
|
13,291
|
Goodwill
|
|
|
|
435,179
|
|
423,250
|
Intangible
assets
|
|
|
|
155,350
|
|
156,069
|
Deferred income tax
assets
|
|
|
|
1,457
|
|
2,138
|
Investment tax credit
receivable
|
|
|
|
50,367
|
|
49,015
|
|
|
|
|
717,324
|
|
712,996
|
Total
assets
|
|
|
$
|
1,396,022
|
$
|
1,374,570
|
|
|
|
|
|
|
|
LIABILITIES AND
EQUITY
|
|
|
|
|
|
|
Current
liabilities
|
|
|
|
|
|
|
Bank
indebtedness
|
9
|
|
$
|
985
|
$
|
1,411
|
Accounts payable and
accrued liabilities
|
|
|
|
172,001
|
|
183,839
|
Provisions
|
8
|
|
|
15,010
|
|
14,124
|
Billings in excess of
costs and earnings
|
|
|
|
|
|
|
|
on contracts in
progress
|
4
|
|
|
105,894
|
|
96,490
|
Current portion of
long-term debt
|
9
|
|
|
1,110
|
|
1,321
|
|
|
|
|
295,000
|
|
297,185
|
Non-current
liabilities
|
|
|
|
|
|
|
Employee
benefits
|
|
|
|
27,310
|
|
26,668
|
Long-term
debt
|
9
|
|
|
318,225
|
|
325,947
|
Deferred income tax
liabilities
|
|
|
|
40,642
|
|
38,761
|
Other long-term
liabilities
|
10
|
|
|
5,639
|
|
––
|
|
|
|
|
391,816
|
|
391,376
|
Total
liabilities
|
|
|
$
|
686,816
|
$
|
688,561
|
|
|
|
|
|
|
|
Commitments and
contingencies
|
9, 14
|
|
|
|
|
|
|
|
|
|
|
|
|
EQUITY
|
|
|
|
|
|
|
Share
capital
|
11
|
|
$
|
543,604
|
$
|
543,317
|
Contributed
surplus
|
|
|
|
13,169
|
|
12,871
|
Accumulated other
comprehensive income
|
|
|
|
66,076
|
|
54,974
|
Retained
earnings
|
|
|
|
86,093
|
|
74,599
|
Equity attributable
to shareholders
|
|
|
|
708,942
|
|
685,761
|
Non-controlling
interests
|
|
|
|
264
|
|
248
|
Total
equity
|
|
|
|
709,206
|
|
686,009
|
Total liabilities
and equity
|
|
|
$
|
1,396,022
|
$
|
1,374,570
|
ATS AUTOMATION
TOOLING SYSTEMS INC.
|
Interim
Consolidated Statements of Income
|
(in thousands of
Canadian dollars, except per share amounts - unaudited)
|
|
|
|
|
|
|
|
|
|
|
July
2
|
July 3
|
For the three months
ended
|
Note
|
|
2017
|
2016
|
|
|
|
|
|
|
|
Revenues
|
|
|
|
|
|
|
|
Revenues from
construction contracts
|
|
|
$
|
143,823
|
$
|
164,940
|
|
Sale of
goods
|
|
|
|
18,867
|
|
18,584
|
|
Services
rendered
|
|
|
|
101,272
|
|
81,828
|
|
|
|
|
|
|
|
Total
revenues
|
|
|
|
263,962
|
|
265,352
|
|
|
|
|
|
|
|
Operating costs and
expenses
|
|
|
|
|
|
|
|
Cost of
revenues
|
|
|
|
197,133
|
|
200,557
|
|
Selling, general and
administrative
|
|
|
|
44,325
|
|
41,328
|
|
Stock-based
compensation
|
13
|
|
|
1,229
|
|
869
|
|
|
|
|
|
|
|
Earnings from
operations
|
|
|
|
21,275
|
|
22,598
|
|
|
|
|
|
|
|
Net finance
costs
|
16
|
|
|
6,195
|
|
6,640
|
|
|
|
|
|
|
|
Income before
income taxes
|
|
|
|
15,080
|
|
15,958
|
|
|
|
|
|
|
|
Income tax
expense
|
12
|
|
|
3,570
|
|
3,857
|
|
|
|
|
|
|
|
Net
income
|
|
|
$
|
11,510
|
$
|
12,101
|
|
|
|
|
|
|
|
Attributable
to
|
|
|
|
|
|
|
Shareholders
|
|
|
$
|
11,494
|
$
|
12,094
|
Non-controlling
interests
|
|
|
|
16
|
|
7
|
|
|
|
$
|
11,510
|
$
|
12,101
|
|
|
|
|
|
|
|
Earnings per share
attributable to shareholders
|
|
|
|
|
|
|
Basic and
diluted
|
17
|
|
$
|
0.12
|
$
|
0.13
|
ATS AUTOMATION
TOOLING SYSTEMS INC.
|
Interim
Consolidated Statements of Comprehensive Income
|
(in thousands of
Canadian dollars - unaudited)
|
|
|
|
|
|
|
July
2
|
July
3
|
For the three months
ended
|
2017
|
2016
|
|
|
|
|
|
Net
income
|
$
|
11,510
|
$
|
12,101
|
|
|
|
|
|
Other comprehensive
income (loss):
|
|
|
|
|
|
|
|
|
|
Items to be
reclassified subsequently to net income:
|
|
|
|
|
|
|
|
|
|
|
Currency translation
adjustment (net of income taxes of $nil)
|
|
10,333
|
|
(6,555)
|
|
|
|
|
|
|
Net unrealized gain
(loss) on derivative financial instruments designated as cash flow
hedges
|
|
2,684
|
|
(613)
|
|
Tax impact
|
|
(712)
|
|
183
|
|
|
|
|
|
|
Loss (gain)
transferred to net income for derivatives designated as cash flow
hedges
|
|
421
|
|
(310)
|
|
Tax impact
|
|
(104)
|
|
78
|
|
|
|
|
|
|
Cash flow hedge
reserve adjustment
|
|
(2,027)
|
|
(368)
|
|
Tax impact
|
|
507
|
|
92
|
|
|
|
|
|
Other
comprehensive income (loss)
|
|
11,102
|
|
(7,493)
|
|
|
|
|
|
Comprehensive
income
|
$
|
22,612
|
$
|
4,608
|
|
|
|
|
|
Attributable
to
|
|
|
|
|
Shareholders
|
$
|
22,596
|
$
|
4,601
|
Non-controlling
interests
|
|
16
|
|
7
|
|
$
|
22,612
|
$
|
4,608
|
ATS AUTOMATION
TOOLING SYSTEMS INC.
|
Interim
Consolidated Statements of Changes in Equity
|
(in thousands of
Canadian dollars - unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three months ended
July 2, 2017
|
|
|
|
|
|
|
|
|
|
|
|
|
Share
capital
|
Contributed
surplus
|
Retained
earnings
|
Currency
translation
adjustments
|
Cash flow
hedge reserve
|
Total
accumulated
other
comprehensive
income
|
Non-
controlling
interests
|
Total
equity
|
Balance, as at
March 31, 2017
|
$
|
543,317
|
$
|
12,871
|
$
|
74,599
|
$
|
55,504
|
$
|
(530)
|
$
|
54,974
|
$
|
248
|
$
|
686,009
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
income
|
|
––
|
|
––
|
|
11,494
|
|
––
|
|
––
|
|
––
|
|
16
|
|
11,510
|
Other comprehensive
income
|
|
––
|
|
––
|
|
––
|
|
10,333
|
|
769
|
|
11,102
|
|
––
|
|
11,102
|
Total comprehensive
income
|
|
––
|
|
––
|
|
11,494
|
|
10,333
|
|
769
|
|
11,102
|
|
16
|
|
22,612
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stock-based
compensation
|
|
––
|
|
377
|
|
––
|
|
––
|
|
––
|
|
––
|
|
––
|
|
377
|
Exercise of stock
options
|
|
287
|
|
(79)
|
|
––
|
|
––
|
|
––
|
|
––
|
|
––
|
|
208
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance, as at
July 2, 2017
|
$
|
543,604
|
$
|
13,169
|
$
|
86,093
|
$
|
65,837
|
$
|
239
|
$
|
66,076
|
$
|
264
|
$
|
709,206
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three months ended
July 3, 2016
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Share
capital
|
Contributed
surplus
|
Retained
earnings
|
Currency
translation
adjustments
|
Cash flow
hedge reserve
|
Total
accumulated
other
comprehensive
income
|
Non-
controlling
interests
|
Total
equity
|
Balance, as at March
31, 2016
|
$
|
528,184
|
$
|
13,201
|
$
|
40,634
|
$
|
66,482
|
$
|
1,837
|
$
|
68,319
|
$
|
215
|
$
|
650,553
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
income
|
|
––
|
|
––
|
|
12,094
|
|
––
|
|
––
|
|
––
|
|
7
|
|
12,101
|
Other comprehensive
loss
|
|
––
|
|
––
|
|
––
|
|
(6,555)
|
|
(938)
|
|
(7,493)
|
|
––
|
|
(7,493)
|
Total comprehensive
income (loss)
|
|
––
|
|
––
|
|
12,094
|
|
(6,555)
|
|
(938)
|
|
(7,493)
|
|
7
|
|
4,608
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stock-based
compensation
|
|
––
|
|
601
|
|
––
|
|
––
|
|
––
|
|
––
|
|
––
|
|
601
|
Exercise of stock
options
|
|
760
|
|
(234)
|
|
––
|
|
––
|
|
––
|
|
––
|
|
––
|
|
526
|
Balance, as at July
3, 2016
|
$
|
528,944
|
$
|
13,568
|
$
|
52,728
|
$
|
59,927
|
$
|
899
|
$
|
60,826
|
$
|
222
|
$
|
656,288
|
ATS AUTOMATION
TOOLING SYSTEMS INC.
|
Interim
Consolidated Statements of Cash Flows
|
(in thousands of
Canadian dollars - unaudited)
|
|
|
|
|
|
|
|
|
|
|
July
2
|
July
3
|
Three months
ended
|
Note
|
|
2017
|
2016
|
|
|
|
|
|
|
|
Operating
activities
|
|
|
|
|
|
|
Income from
operations
|
|
|
$
|
11,510
|
$
|
12,101
|
Items not involving
cash
|
|
|
|
|
|
|
|
Depreciation of
property, plant and equipment
|
|
|
|
2,486
|
|
2,299
|
|
Amortization of
intangible assets
|
|
|
|
6,390
|
|
6,612
|
|
Deferred income
taxes
|
12
|
|
|
862
|
|
1,457
|
|
Other items not
involving cash
|
|
|
|
39
|
|
(2,416)
|
|
Stock-based
compensation
|
13
|
|
|
1,229
|
|
869
|
|
Loss on disposal of
property, plant and equipment
|
|
|
|
24
|
|
4
|
|
|
|
|
22,540
|
|
20,926
|
Change in non-cash
operating working capital
|
|
|
|
(25,899)
|
|
36,598
|
Cash flows
provided by (used in) operating activities
|
|
|
$
|
(3,359)
|
$
|
57,524
|
|
|
|
|
|
|
|
Investing
activities
|
|
|
|
|
|
|
Acquisition of
property, plant and equipment
|
|
|
$
|
(3,308)
|
$
|
(1,846)
|
Acquisition of
intangible assets
|
|
|
|
(855)
|
|
(1,437)
|
Proceeds from
disposal of property, plant and equipment
|
|
|
|
15
|
|
31
|
Cash flows used in
investing activities
|
|
|
$
|
(4,148)
|
$
|
(3,252)
|
|
|
|
|
|
|
|
Financing
activities
|
|
|
|
|
|
|
Bank
indebtedness
|
|
|
$
|
(420)
|
$
|
(755)
|
Repayment of
long-term debt
|
|
|
|
(348)
|
|
(144)
|
Proceeds from
long-term debt
|
|
|
|
6
|
|
66
|
Proceeds from
exercise of stock options
|
|
|
|
208
|
|
526
|
Cash flows used in
financing activities
|
|
|
$
|
(554)
|
$
|
(307)
|
|
|
|
|
|
|
|
Effect of exchange
rate changes on cash and cash equivalents
|
|
|
|
722
|
|
(1,467)
|
|
|
|
|
|
|
|
Increase (decrease)
in cash and cash equivalents
|
|
|
|
(7,339)
|
|
52,498
|
|
|
|
|
|
|
|
Cash and cash
equivalents, beginning of period
|
|
|
|
286,697
|
|
170,034
|
|
|
|
|
|
|
|
Cash and cash
equivalents, end of period
|
|
|
$
|
279,358
|
$
|
222,532
|
|
|
|
|
|
|
|
Supplemental
information
|
|
|
|
|
|
|
Cash income taxes
paid
|
|
|
$
|
3,457
|
$
|
4,405
|
Cash interest
paid
|
|
|
$
|
9,907
|
$
|
11,236
|
SOURCE ATS Automation Tooling Systems Inc.