CAMBRIDGE, ON, Nov. 8, 2017 /CNW/ - ATS Automation Tooling
Systems Inc. (TSX: ATA) ("ATS" or the "Company") today
reported financial results for the three and six months ended
October 1, 2017.
Second Quarter Summary
- Revenues were $274.9 million, 13%
higher than a year ago.
- Earnings from operations were $23.9
million (9% operating margin), compared to $17.3 million (7% operating margin) in the second
quarter of fiscal 2017. Adjusted earnings from
operations1 were $28.8
million (10% margin), compared to $22.3 million (9% margin) in the second quarter a
year ago, primarily reflecting higher revenues and improved gross
margin.
- EBITDA1 was $32.8
million (12% margin), compared to $25.3 million (10% margin) in the second quarter
of fiscal 2017.
- Earnings per share were 15 cents
basic and diluted compared to 9 cents
basic and diluted a year ago. Adjusted basic earnings per
share1 were 18 cents for
the second quarter of fiscal 2018 compared to 13 cents a year ago.
- Order Bookings were $257 million,
an 11% decrease from the second quarter of fiscal 2017.
- Period end Order Backlog was $648
million, 1% lower than at October 2,
2016.
- On July 28, 2017, the Company
amended its $750 million senior
secured credit facility to extend the agreement by three years to
mature on August 29, 2021. The
Company's balance sheet and financial capacity to support growth
remained strong, with unutilized credit facilities of $647.9 million.
- Subsequent to the end of the second quarter of fiscal 2018, the
Company announced an operational improvement program following a
review of its global operations. See "Operational
Improvements".
1 Non-IFRS
measure: see "Notice to Reader: Non-IFRS Measures and Additional
IFRS Measures".
|
"Our second quarter performance reflected both year over year
and sequential growth in revenues and margins," said Andrew Hider, Chief Executive Officer. "We have
advanced the initial roll-out of our ATS Business Model and while
we are in the early stages of deployment, we are making progress
towards adoption across our global operations. Going forward, we
have a strong balance sheet and a clear strategic framework with
the goal of creating long-term sustainable shareholder value."
Financial Results
|
3 months
ended October 1,
2017
|
3 months
ended October 2,
2016
|
6 months
ended
October 1,
2017
|
6 months
ended
October 2,
2016
|
Revenues
|
$
|
274.9
|
$
|
242.5
|
$
|
538.9
|
$
|
507.8
|
Earnings from
operations
|
$
|
23.9
|
$
|
17.3
|
$
|
45.2
|
$
|
39.9
|
Adjusted earnings
from operations1
|
$
|
28.8
|
$
|
22.3
|
$
|
55.1
|
$
|
50.2
|
EBITDA1
|
$
|
32.8
|
$
|
25.3
|
$
|
63.0
|
$
|
56.8
|
Net
income
|
$
|
13.8
|
$
|
8.5
|
$
|
25.3
|
$
|
20.6
|
Adjusted basic
earnings per share1
|
$
|
0.18
|
$
|
0.13
|
$
|
0.34
|
$
|
0.30
|
Basic and diluted
earnings per share
|
$
|
0.15
|
$
|
0.09
|
$
|
0.27
|
$
|
0.22
|
1 Non-IFRS
measure: see "Notice to Reader: Non-IFRS Measures and Additional
IFRS Measures".
|
Second Quarter Summary
Fiscal 2018 second quarter
revenues were 13% higher than in the corresponding period a year
ago. Higher revenues primarily reflected higher Order Backlog
entering the second quarter of fiscal 2018 compared to a year ago.
By market, fiscal 2018 second quarter revenues from consumer
products & electronics increased 15% compared to a year ago due
to timing of Order Bookings. Revenues generated in the energy
market decreased 26% primarily due to lower Order Backlog entering
the second quarter of fiscal 2018 compared to a year ago.
Revenues in the life sciences market increased 37%, primarily
reflecting higher Order Backlog entering the second quarter of
fiscal 2018 compared to a year ago. Transportation revenues
increased 6% compared to a year ago primarily due to timing of
Order Bookings.
Fiscal 2018 second quarter earnings from operations were
$23.9 million (9% operating margin)
compared to $17.3 million (7%
operating margin) in the second quarter of fiscal 2017.
Second quarter fiscal 2018 earnings from operations included
$4.9 million related to amortization
of identifiable intangible assets recorded on the acquisitions of
PA, IWK and sortimat. Included in second quarter fiscal 2017
earnings from operations was $5.0
million related to amortization of identifiable intangible
assets recorded on the acquisitions of PA, IWK and sortimat.
Excluding these items, second quarter fiscal 2018 adjusted earnings
from operations were $28.8 million
(10% margin), compared to adjusted earnings from operations of
$22.3 million (9% margin) a year ago.
Higher adjusted earnings from operations primarily reflected
higher revenues and an improved gross margin in the second quarter
of fiscal 2018, partially offset by higher selling, general and
administrative expenses compared to a year ago.
Depreciation and amortization expense was $8.9 million in the second quarter of fiscal 2018
and $8.0 million in the second
quarter of fiscal 2017. The increase primarily reflected
depreciation of internal development projects and computer
hardware.
EBITDA was $32.8 million (12%
EBITDA margin) in the second quarter of fiscal 2018 compared to
$25.3 million (10% EBITDA margin) in
the second quarter of fiscal 2017.
Order Bookings
Second quarter fiscal 2018 Order
Bookings were $257 million, an 11%
decrease from the second quarter of fiscal 2017. By customer
market, lower Order Bookings in the life sciences market were
partially offset by higher Order Bookings in consumer products
& electronics, energy and transportation markets.
Order Backlog
At October 1,
2017, Order Backlog was $648
million, 1% lower than at October
2, 2016. Lower Order Backlog in the consumer products
& electronics and transportation markets was partially offset
by higher Order Backlog in the energy and life sciences markets.
Order Backlog a year ago included approximately $70 million related to a program that was put on
hold by a customer subsequent to the end of the period and then
cancelled due to rapid changes in their market. Foreign
exchange rate changes negatively impacted the translation of Order
Backlog from foreign-based ATS subsidiaries compared to second
quarter fiscal 2017.
Operational Improvements
Following a thorough review
of the Company's operations, including its global capabilities and
leadership, management has implemented a restructuring that will
result in the closure of one division in southeast Asia, the rationalization of a business line
at a division in Europe, as well
as leadership and management changes. In total, management expects
that approximately 3% of the Company's workforce will be
affected. The restructuring is designed to improve the
Company's leadership, cost structure and enhance capacity
utilization by realigning resources to areas of the business that
will enable it to deliver increased value to customers and
shareholders. The restructuring will be completed over the next
three to four months and most of the associated cost of
approximately $9 million to $10
million will be incurred in the Company's third fiscal
quarter. Management expects an 18 to 24 month payback.
Board of Directors
Ivan
Ross has announced his decision to step down from the board
of directors effective November 8,
2017, in order to focus on his role at Ardea Partners, a
financial advisory firm which Mr. Ross co-founded in 2016. With the
recent appointment of Kirsten Lange
to the board of directors, its membership is now comprised of seven
directors.
"On behalf of the board of directors, I thank Ivan for his
significant contributions to ATS," said David McAusland, Chairman. "Ivan has been a
valuable and dedicated member of our board and we wish him every
success in his future endeavours."
Quarterly Conference Call
ATS' quarterly conference
call will begin at 10:00 a.m. eastern
on Wednesday November 8, 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
6088339 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 23
manufacturing facilities and over 50 offices in North America, Europe, Southeast
Asia and China.
Management's Discussion and Analysis
For the Quarter
Ended October 1, 2017
This Management's Discussion and Analysis ("MD&A") for
the three and six months ended October 1,
2017 (second quarter of fiscal 2018) is as of November 7, 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 second
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 second
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- and six-month periods ending October 1, 2017 and October 2, 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- and six-month periods ending
October 1, 2017 and October 2, 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 including the launch of the ATS Business Model ("ABM"),
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 growing
organically through the development and implementation of growth
tools under the 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 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
|
Six
Months
|
Six
Months
|
|
Ended
|
Ended
|
Ended
|
Ended
|
Revenues by
market
|
October 1,
2017
|
October 2,
2016
|
October 1,
2017
|
October 2,
2016
|
Consumer products
&
electronics
|
$
|
32.2
|
$
|
28.0
|
$
|
68.8
|
$
|
64.1
|
Energy
|
|
34.6
|
|
47.0
|
|
56.4
|
|
112.3
|
Life
sciences
|
|
134.5
|
|
97.9
|
|
253.6
|
|
192.5
|
Transportation
|
|
73.6
|
|
69.6
|
|
160.1
|
|
138.9
|
Total
revenues
|
$
|
274.9
|
$
|
242.5
|
$
|
538.9
|
$
|
507.8
|
Second Quarter
Fiscal 2018 second quarter revenues
were 13% higher than in the corresponding period a year ago.
Higher revenues primarily reflected higher Order Backlog entering
the second quarter of fiscal 2018 compared to a year ago.
By market, fiscal 2018 second quarter revenues from consumer
products & electronics increased 15% compared to a year ago due
to timing of Order Bookings. Revenues generated in the energy
market decreased 26% primarily due to lower Order Backlog entering
the second quarter of fiscal 2018 compared to a year ago.
Revenues in the life sciences market increased 37%, primarily
reflecting higher Order Backlog entering the second quarter of
fiscal 2018 compared to a year ago. Transportation revenues
increased 6% compared to a year ago primarily due to timing of
Order Bookings.
Year-to-date
Revenues for the six months ended
October 1, 2017 were 6% higher than
in the corresponding period a year ago, primarily reflecting higher
Order Backlog entering fiscal 2018 compared to a year ago.
By market, fiscal 2018 year-to-date revenues from consumer
products & electronics increased 7%, primarily due to timing of
Order Bookings. Revenues generated in the energy market
decreased 50% primarily due to lower Order Backlog entering fiscal
2018 compared to a year ago. Revenues in the life sciences
market increased 32%, primarily reflecting higher Order Backlog
entering fiscal 2018 compared to a year ago. Transportation
revenues increased 15% compared to a year ago primarily due to
higher Order Backlog entering fiscal 2018 compared to a year
ago.
Consolidated Operating Results
(In millions of
dollars)
|
Three
Months
|
Three
Months
|
Six
Months
|
Six
Months
|
|
Ended
|
Ended
|
Ended
|
Ended
|
|
October 1,
2017
|
October 2,
2016
|
October 1,
2017
|
October 2,
2016
|
Earnings from
operations
|
$
|
23.9
|
$
|
17.3
|
$
|
45.2
|
$
|
39.9
|
Amortization of
acquisition-related intangible assets
|
|
4.9
|
|
5.0
|
|
9.9
|
|
10.3
|
Adjusted earnings
from operations1
|
$
|
28.8
|
$
|
22.3
|
$
|
55.1
|
$
|
50.2
|
1 See
"Notice to Reader: Non-IFRS Measures and Additional IFRS
Measures."
|
|
Three
Months
|
Three
Months
|
Six
Months
|
Six
Months
|
|
Ended
|
Ended
|
Ended
|
Ended
|
|
October 1,
2017
|
October 2,
2016
|
October 1,
2017
|
October 2,
2016
|
Earnings from
operations
|
$
|
23.9
|
$
|
17.3
|
$
|
45.2
|
$
|
39.9
|
Depreciation and
amortization
|
|
8.9
|
|
8.0
|
|
17.8
|
|
16.9
|
EBITDA2
|
$
|
32.8
|
$
|
25.3
|
$
|
63.0
|
$
|
56.8
|
2 See
"Notice to Reader: Non-IFRS Measures and Additional IFRS
Measures."
|
|
|
|
Second Quarter
Fiscal 2018 second quarter earnings
from operations were $23.9 million
(9% operating margin) compared to $17.3
million (7% operating margin) in the second quarter of
fiscal 2017. Second quarter fiscal 2018 earnings from
operations included $4.9 million
related to amortization of identifiable intangible assets recorded
on the acquisitions of PA, IWK and sortimat. Included in
second quarter fiscal 2017 earnings from operations was
$5.0 million related to amortization
of identifiable intangible assets recorded on the acquisitions of
PA, IWK and sortimat. Excluding these items, second quarter
fiscal 2018 adjusted earnings from operations were $28.8 million (10% margin), compared to adjusted
earnings from operations of $22.3
million (9% margin) a year ago. Higher adjusted
earnings from operations primarily reflected higher revenues and an
improved gross margin in the second quarter of fiscal 2018,
partially offset by higher selling, general and administrative
expenses compared to a year ago.
Depreciation and amortization expense was $8.9 million in the second quarter of fiscal 2018
and $8.0 million in the second
quarter of fiscal 2017. The increase primarily reflected
depreciation of internal development projects and computer
hardware.
EBITDA was $32.8 million (12%
EBITDA margin) in the second quarter of fiscal 2018 compared to
$25.3 million (10% EBITDA margin) in
the second quarter of fiscal 2017.
Year-to-date
For the six months ended October 1, 2017, earnings from operations were
$45.2 million (8% operating margin)
compared to $39.9 million (8%
operating margin) in the corresponding period a year ago.
Excluding $9.9 million related to
amortization of identifiable intangible assets recorded on the
acquisitions of PA, IWK and sortimat, adjusted earnings from
operations were $55.1 million (10%
operating margin) in the first six months of fiscal 2018, compared
to adjusted earnings from operations of $50.2 million (10% operating margin) in the
corresponding period a year ago. Higher adjusted earnings
from operations primarily reflected higher revenues and an improved
gross margin in fiscal 2018, partially offset by higher selling,
general and administrative expenses compared to a year ago.
Depreciation and amortization expense was $17.8 million in the first six months of fiscal
2018 compared to $16.9 million a year
ago. The increase primarily reflected depreciation of
internal development projects and computer hardware.
Year-to-date fiscal 2018 EBITDA was $63.0
million (12% EBITDA margin) compared to $56.8 million (11% EBITDA margin) in the first
six months of fiscal 2017.
Order Bookings by Quarter
Second quarter fiscal 2018
Order Bookings were $257 million, an
11% decrease from the second quarter of fiscal 2017. By
customer market, lower Order Bookings in the life sciences market
were partially offset by higher Order Bookings in consumer products
& electronics, energy and transportation markets.
Order Backlog Continuity
(In millions of dollars)
|
Three
Months
|
Three
Months
|
Six
Months
|
Six
Months
|
|
Ended
|
Ended
|
Ended
|
Ended
|
|
October 1,
2017
|
October 2,
2016
|
October 1,
2017
|
October 2,
2016
|
Opening Order
Backlog
|
$
|
683
|
$
|
610
|
$
|
681
|
$
|
652
|
Revenues
|
|
(275)
|
|
(243)
|
|
(539)
|
|
(508)
|
Order
Bookings
|
|
257
|
|
289
|
|
523
|
|
528
|
Order Backlog
adjustments1
|
|
(17)
|
|
(2)
|
|
(17)
|
|
(18)
|
Total2
|
$
|
648
|
$
|
654
|
$
|
648
|
$
|
654
|
1 Order
Backlog adjustments include foreign exchange adjustments and
cancellations.
|
|
2
Approximately $70 million of Order Backlog as at October 2, 2016
related to a program that was put on hold by a customer and
cancelled subsequent to the end of the second quarter of fiscal
2017.
|
Order Backlog by Market
(In millions of dollars)
As
at
|
October 1,
2017
|
October 2,
2016
|
Consumer products
& electronics
|
$
|
64
|
$
|
81
|
Energy
|
|
104
|
|
95
|
Life
sciences
|
|
307
|
|
284
|
Transportation
|
|
173
|
|
194
|
Total1
|
$
|
648
|
$
|
654
|
1
Approximately $70 million of Order Backlog as at October 2, 2016
related to a program that was put on hold by a customer and
cancelled subsequent to the end of the second quarter of fiscal
2017.
|
At October 1, 2017, Order Backlog
was $648 million, 1% lower than at
October 2, 2016. Lower Order
Backlog in the consumer products & electronics and
transportation markets was partially offset by higher Order Backlog
in the energy and life sciences markets. Order Backlog a year
ago included approximately $70
million related to a program that was put on hold by a
customer subsequent to the end of the period and then cancelled due
to rapid changes in their market. Foreign exchange rate
changes negatively impacted the translation of Order Backlog from
foreign-based ATS subsidiaries compared to second quarter fiscal
2017.
Outlook
The global economic environment has shown some
recent signs of improvement; however, geopolitical risks remain.
The Company's Order Bookings are generally variable and sensitive
to changes in the major economies the Company serves including the
U.S., Canada, Europe and Asia.
Funnel activity (which includes customer requests for proposal
and ATS identified customer opportunities) in life sciences remains
strong and funnel activity in the transportation market is solid,
particularly with opportunities in the electrification of vehicles.
Funnel activity in energy markets is fluid, and provides select
opportunities for ATS. 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's sales organization continues to work to engage
customers on enterprise-type solutions, which it expects 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 is expected to cause
variability in Order Bookings from quarter to quarter and, lengthen
the performance period and revenue recognition for certain customer
programs. 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 this may not offset
capital spending volatility. The Company expects its Order Backlog
of $648 million at the end of the
second quarter of fiscal 2018 to partially mitigate the impact of
volatile Order Bookings on revenues in the short term. In the third
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.
Following a thorough review of the Company's operations,
including its global capabilities and leadership, management has
implemented a restructuring that will result in the closure of one
division in southeast Asia, the
rationalization of a business line at a division in Europe, as well as leadership and management
changes. In total, management expects that approximately 3% of the
Company's workforce will be affected. The restructuring is
designed to improve the Company's leadership, cost structure and
enhance capacity utilization by realigning resources to areas of
the business that will enable it to deliver increased value to
customers and shareholders. The restructuring will be completed
over the next three to four months and most of the associated cost
of approximately $9 million to $10
million will be incurred in the Company's third fiscal
quarter. Management expects an 18 to 24 month payback.
The Company is deploying the ATS Business Model across its
divisions globally. The initial roll-out of the ABM includes
Company-wide training and deployment of tools to standardize
problem solving and continuous improvement processes. The Company
expects training and deployment to be complete by the end of fiscal
2018. As the initial ABM tools are implemented, management will
deploy additional tools as part of the on-going evolution of the
ABM, with the goal of driving growth and continuous, sustained
performance improvements across the Company. Management expects
that the ABM will provide the Company with a long-term competitive
advantage in delivering value to its customers and
shareholders.
The Company seeks 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
|
Six
Months
|
Six
Months
|
|
Ended
|
Ended
|
Ended
|
Ended
|
|
October 1,
2017
|
October 2,
2016
|
October 1,
2017
|
October 2,
2016
|
Revenues
|
$
|
274.9
|
$
|
242.5
|
$
|
538.9
|
$
|
507.8
|
Cost of
revenues
|
|
204.1
|
|
181.8
|
|
401.3
|
|
382.3
|
Selling, general and
administrative
|
|
45.2
|
|
41.2
|
|
89.5
|
|
82.5
|
Stock-based
compensation
|
|
1.7
|
|
2.2
|
|
2.9
|
|
3.1
|
Earnings from
operations
|
$
|
23.9
|
$
|
17.3
|
$
|
45.2
|
$
|
39.9
|
Net finance
costs
|
$
|
6.2
|
$
|
6.4
|
$
|
12.4
|
$
|
13.0
|
Provision for income
taxes
|
|
3.9
|
|
2.4
|
|
7.5
|
|
6.3
|
Net
income
|
$
|
13.8
|
$
|
8.5
|
$
|
25.3
|
$
|
20.6
|
Basic and diluted
earnings per share
|
$
|
0.15
|
$
|
0.09
|
$
|
0.27
|
$
|
0.22
|
Revenues. At $274.9
million, consolidated revenues for the second quarter of
fiscal 2018 were $32.4 million, or
13%, higher than the corresponding period a year ago. At
$538.9 million, year-to-date revenues
were $31.1 million, or 6%, higher
than in the corresponding period a year ago (see "Overview –
Operating Results").
Cost of revenues. At $204.1
million, second quarter fiscal 2018 cost of revenues
increased compared to the corresponding period a year ago by
$22.3 million, or 12%.
Year-to-date cost of revenues of $401.3 million increased $19.0 million, or 5%, primarily on higher
revenues. At 26%, gross margin in the second quarter of
fiscal 2018 increased 1% from the corresponding period a year ago,
due primarily to improved program execution and operational
utilization. Year-to-date gross margin of 26% also increased
1% from last year.
Selling, general and administrative ("SG&A")
expenses. SG&A expenses for the second quarter of
fiscal 2018 were $45.2 million, which
included $4.9 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 second quarter of fiscal 2017 were
$41.2 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.
Excluding these costs, SG&A expenses were $40.3 million in the second quarter of fiscal
2018, up from $36.2 million a year
ago. Higher SG&A expenses in the second quarter of fiscal
2018 primarily reflected increased employee costs and professional
fees.
For the six months ended October 1,
2017, SG&A expenses were $89.5
million, which included $9.9
million of expenses related to the amortization of
identifiable intangible assets recorded on the acquisitions of PA,
IWK and sortimat. Excluding these costs, SG&A expenses
were $79.6 million for the six months
ended October 1, 2017.
Comparably, SG&A expenses for the six months ended October 2, 2016 were $72.2
million, which excluded $10.3
million of expenses related to the amortization of
identifiable intangible assets recorded on the acquisitions of PA,
IWK, ATW and sortimat. Higher SG&A expenses in the first
six months of fiscal 2018 primarily reflected increased employee
costs.
Stock-based compensation. Stock-based compensation
expense amounted to $1.7 million in
the second quarter of fiscal 2018 compared to $2.2 million in the corresponding period a year
ago. For the six-month period ended October 1, 2017, stock-based compensation expense
decreased to $2.9 million from
$3.1 million a year earlier.
The decrease in stock-based compensation costs is attributable to
lower expenses from the revaluation of deferred stock units and
lower expenses from stock options, partially offset by increased
expenses from restricted share units.
Earnings from operations. For the three- and
six-month periods ended October 1,
2017, consolidated earnings from operations were
$23.9 million (9% operating margin)
and $45.2 million (8% operating
margin), respectively, compared to earnings from operations of
$17.3 million (7% operating margin)
and $39.9 million (8% operating
margin) in the corresponding periods a year ago (see "Overview –
Operating Results").
Net finance costs. Net finance costs were
$6.2 million in the second quarter of
fiscal 2018, $0.2 million lower than
in the corresponding period a year ago. For the six months
ended October 1, 2017, finance costs
were $12.4 million compared to
$13.0 million in the corresponding
period a year ago. The decrease was primarily due to higher
interest income earned in the first two quarters of fiscal 2018
compared to the corresponding period a year ago.
Income tax provision. For the three and six months ended
October 1, 2017, the Company's
effective income tax rates of 22% and 23%, respectively,
differed from the combined Canadian basic federal and provincial
income tax rate of 27% primarily due to certain non-deductible
income and 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 second quarter net income was
$13.8 million (15 cents per share basic and diluted) compared to
$8.5 million (9 cents per share basic and diluted) for the
second quarter of fiscal 2017. Adjusted basic earnings per
share were 18 cents in the second
quarter of fiscal 2018 compared to 13
cents for the second quarter of fiscal 2017 (see
"Reconciliation of Non-IFRS Measures to IFRS Measures").
Net income for the six months ended October 1, 2017 was $25.3
million (27 cents per share
basic and diluted) compared to $20.6
million (22 cents per share
basic and diluted) for the corresponding period a year ago.
Adjusted basic earnings per share were 34
cents in the six months ended October
1, 2017 compared to 30 cents
in the corresponding period a year ago (see "Reconciliation of
Non-IFRS Measures to IFRS Measures").
Reconciliation of Non-IFRS Measures to IFRS
Measures
(In millions of dollars, except per share data)
The following table reconciles EBITDA to the most directly
comparable IFRS measure (net income):
|
Three
Months
|
Three
Months
|
Six
Months
|
Six
Months
|
|
Ended
|
Ended
|
Ended
|
Ended
|
|
October 1,
2017
|
October 2,
2016
|
October 1,
2017
|
October 2,
2016
|
EBITDA
|
$
|
32.8
|
$
|
25.3
|
$
|
63.0
|
$
|
56.8
|
Less: depreciation
and amortization expense
|
|
8.9
|
|
8.0
|
|
17.8
|
|
16.9
|
Earnings from
operations
|
$
|
23.9
|
$
|
17.3
|
$
|
45.2
|
$
|
39.9
|
Less: net finance
costs
|
|
6.2
|
|
6.4
|
|
12.4
|
|
13.0
|
Provision for income
taxes
|
|
3.9
|
|
2.4
|
|
7.5
|
|
6.3
|
Net
income
|
$
|
13.8
|
$
|
8.5
|
$
|
25.3
|
$
|
20.6
|
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
October 1, 2017
|
Three Months Ended
October 2, 2016
|
|
IFRS
|
Adjustments
|
Adjusted
|
IFRS
|
Adjustments
|
Adjusted
|
|
|
|
(non-IFRS)
|
|
|
(non-IFRS)
|
Earnings from
operations
|
$
|
23.9
|
$
|
––
|
$
|
23.9
|
$
|
17.3
|
$
|
––
|
$
|
17.3
|
Amortization of
acquisition-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
related intangible
assets
|
|
––
|
|
4.9
|
|
4.9
|
|
––
|
|
5.0
|
|
5.0
|
|
$
|
23.9
|
$
|
4.9
|
$
|
28.8
|
$
|
17.3
|
$
|
5.0
|
$
|
22.3
|
Less: net finance
costs
|
$
|
6.2
|
$
|
––
|
$
|
6.2
|
$
|
6.4
|
$
|
––
|
$
|
6.4
|
Income before
income taxes
|
$
|
17.7
|
$
|
4.9
|
$
|
22.6
|
$
|
10.9
|
$
|
5.0
|
$
|
15.9
|
Provision for income
taxes
|
$
|
3.9
|
$
|
––
|
$
|
3.9
|
$
|
2.4
|
$
|
––
|
$
|
2.4
|
Adjustment to
provision for
|
|
|
|
|
|
|
|
|
|
|
|
|
|
income
taxes1
|
|
––
|
|
1.5
|
|
1.5
|
|
––
|
|
1.5
|
|
1.5
|
|
$
|
3.9
|
$
|
1.5
|
$
|
5.4
|
$
|
2.4
|
$
|
1.5
|
$
|
3.9
|
Net
income
|
$
|
13.8
|
$
|
3.4
|
$
|
17.2
|
$
|
8.5
|
$
|
3.5
|
$
|
12.0
|
Basic earnings per
share
|
$
|
0.15
|
$
|
0.03
|
$
|
0.18
|
$
|
0.09
|
$
|
0.04
|
$
|
0.13
|
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.
|
|
Six Months Ended
October 1, 2017
|
Six Months
Ended October 2, 2016
|
|
IFRS
|
Adjustments
|
Adjusted
|
IFRS
|
Adjustments
|
Adjusted
|
|
|
|
|
|
(non-IFRS)
|
|
|
(non-IFRS)
|
Earnings from
operations
|
$
|
45.2
|
$
|
––
|
$
|
45.2
|
$
|
39.9
|
$
|
––
|
$
|
39.9
|
Amortization of
acquisition-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
related intangible
assets
|
|
––
|
|
9.9
|
|
9.9
|
|
––
|
|
10.3
|
|
10.3
|
|
$
|
45.2
|
$
|
9.9
|
$
|
55.1
|
$
|
39.9
|
$
|
10.3
|
$
|
50.2
|
Less: net finance
costs
|
$
|
12.4
|
$
|
––
|
$
|
12.4
|
$
|
13.0
|
$
|
––
|
$
|
13.0
|
Income before
income taxes
|
$
|
32.8
|
$
|
9.9
|
$
|
42.7
|
$
|
26.9
|
$
|
10.3
|
$
|
37.2
|
Provision for income
taxes
|
$
|
7.5
|
$
|
––
|
$
|
7.5
|
$
|
6.3
|
$
|
––
|
$
|
6.3
|
Adjustment to
provision for
|
|
|
|
|
|
|
|
|
|
|
|
|
|
income
taxes1
|
|
––
|
|
3.1
|
|
3.1
|
|
––
|
|
3.2
|
|
3.2
|
|
$
|
7.5
|
$
|
3.1
|
$
|
10.6
|
$
|
6.3
|
$
|
3.2
|
$
|
9.5
|
Net
income
|
$
|
25.3
|
$
|
6.8
|
$
|
32.1
|
$
|
20.6
|
$
|
7.1
|
$
|
27.7
|
Basic earnings per
share
|
$
|
0.27
|
$
|
0.07
|
$
|
0.34
|
$
|
0.22
|
$
|
0.08
|
$
|
0.30
|
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
|
October 1,
2017
|
March 31,
2017
|
Cash and cash
equivalents
|
$
|
306.3
|
$
|
286.7
|
Debt-to-equity
ratio
|
|
0.47:1
|
|
0.52:1
|
|
|
|
|
|
For the three months
ended
|
October 1,
2017
|
October 2,
2016
|
Cash flows provided
by operating activities
|
$
|
37.7
|
$
|
3.8
|
At October 1, 2017, the Company
had cash and cash equivalents of $306.3
million compared to $286.7
million at March 31,
2017. At October 1, 2017, the
Company's debt-to-total equity ratio was 0.47:1.
At October 1, 2017, the Company
had $647.9 million of unutilized
multipurpose credit, including letters of credit, available under
existing credit facilities and an additional $3.7 million available under letter of credit
facilities.
In the three months ended October 1,
2017, cash flows provided by operating activities were
$37.7 million ($3.8 million provided by operating activities in
the second quarter a year ago). The increase in operating
cash flows related primarily to the timing of investments in
non-cash working capital in certain customer programs. In the
six months ended October 1, 2017,
cash flows provided by operating activities were $34.3 million ($61.3
million provided by operating activities in the
corresponding period a year ago). The decrease in operating
cash flows related primarily to the timing of investments in
non-cash working capital in large customer programs.
In the second quarter of fiscal 2018, the Company's investment
in non-cash working capital decreased by $13.8 million from July
2, 2017. On a year-to-date basis, investment in
non-cash working capital increased $12.1
million. Accounts receivable increased 10%, or
$16.7 million, driven by the timing
of billings on certain customer contracts. Net contracts in
progress decreased 22%, or $10.6
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 14%, or $6.8 million, primarily due to an increase in
work-in-process on certain customer projects. Deposits and
prepaid assets increased 46%, or $7.4
million, compared to March 31,
2017 due to the timing of program execution. Accounts
payable and accrued liabilities increased 5%, or $9.0 million, compared to March 31, 2017. Provisions increased 12%,
or $1.7 million, compared to
March 31, 2017.
Capital expenditures totalled $7.2
million in the first six months of fiscal 2018, primarily
related to computer hardware, production equipment and building
additions.
Intangible assets expenditures were $2.9
million for the first six 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.
On July 28, 2017, the Company
amended its Credit Facility to extend the agreement by three years
to mature on August 29, 2021.
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 October 1, 2017, the Company had utilized
$106.7 million under the Credit
Facility by way of letters of credit (March
31, 2017 - $115.0
million).
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
October 1, 2017, all of the covenants
were met.
The Company has additional credit facilities available of
$7.0 million (2.5 million Euros, 75.0
million Indian Rupees, 50.0 million
Thai Baht and 1.5 million Czech Koruna). The total
amount outstanding on these facilities at October 1, 2017 was $2.4
million, of which $1.1 million
was classified as bank indebtedness (March
31, 2017 - $1.4 million) and
$1.3 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
|
$
|
9.2
|
$
|
85.8
|
One – two
years
|
|
8.1
|
|
0.8
|
Two – three
years
|
|
7.1
|
|
0.5
|
Three – four
years
|
|
5.2
|
|
––
|
Four – five
years
|
|
3.2
|
|
––
|
Due in over five
years
|
|
0.9
|
|
––
|
|
$
|
33.7
|
$
|
87.1
|
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
October 1, 2017, the total value of
outstanding letters of credit was approximately $127.1 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 six months of fiscal 2018, 23,250 stock options
were exercised. At November 7,
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 six months 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
|
Six Months
Ended
|
|
October 1,
2017
|
October 2,
2016
|
% change
|
October 1,
2017
|
October 2,
2016
|
% change
|
U.S.
Dollar
|
1.252
|
1.305
|
(4.1%)
|
1.299
|
1.297
|
0.2%
|
Euro
|
1.473
|
1.457
|
1.1%
|
1.476
|
1.456
|
1.4%
|
CONSOLIDATED QUARTERLY RESULTS
(In millions of
dollars, except per share amounts)
|
Q2
|
Q1
|
Q4
|
Q3
|
Q2
|
Q1
|
Q4
|
Q3
|
|
2018
|
2018
|
2017
|
2017
|
2017
|
2017
|
2016
|
2016
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenues
|
$
|
274.9
|
$
|
264.0
|
$
|
265.7
|
$
|
237.4
|
$
|
242.5
|
$
|
265.4
|
$
|
246.8
|
$
|
274.9
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings from
operations
|
$
|
23.9
|
$
|
21.3
|
$
|
16.8
|
$
|
15.3
|
$
|
17.3
|
$
|
22.6
|
$
|
8.1
|
$
|
26.8
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted earnings
from
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
operations
|
$
|
28.8
|
$
|
26.3
|
$
|
24.5
|
$
|
22.5
|
$
|
22.3
|
$
|
27.9
|
$
|
23.2
|
$
|
32.1
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
income
|
$
|
13.8
|
$
|
11.5
|
$
|
7.8
|
$
|
6.6
|
$
|
8.5
|
$
|
12.1
|
$
|
1.4
|
$
|
15.5
|
Basic and diluted
earnings
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
per
share
|
$
|
0.15
|
$
|
0.12
|
$
|
0.08
|
$
|
0.07
|
$
|
0.09
|
$
|
0.13
|
$
|
0.02
|
$
|
0.16
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted basic
earnings per
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
share
|
$
|
0.18
|
$
|
0.16
|
$
|
0.15
|
$
|
0.12
|
$
|
0.13
|
$
|
0.17
|
$
|
0.14
|
$
|
0.21
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Order
Bookings
|
$
|
257.0
|
$
|
266.0
|
$
|
322.0
|
$
|
284.0
|
$
|
289.0
|
$
|
239.0
|
$
|
390.0
|
$
|
228.0
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Order
Backlog
|
$
|
648.0
|
$
|
683.0
|
$
|
681.0
|
$
|
632.0
|
$
|
654.0
|
$
|
610.0
|
$
|
652.0
|
$
|
546.0
|
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 and six months ended October 1, 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; 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;
expectation that the Company's efforts to expand its after-sales
service offering will provide some balance to the capital
expenditure cycle of its customers; the Company's Order Backlog
partially mitigating the impact of volatile Order Bookings; rate of
Order Backlog conversion; the Company's expectations surrounding
the restructuring currently being implemented, including with
respect to the number of employees affected, impact, timing, cost,
and payback; launch of the ATS Business Model ("ABM") 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
negative impact associated with any cancellations or
non-performance in relation thereto; that revenues from after-sales
services are insufficient to offset capital spending volatility;
variations in the amount of Order Backlog completed in any given
quarter; that the current restructuring does not generate
anticipated benefits, that it takes longer than anticipated, or
that the cost and payback is other than expected; 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;
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)
|
|
|
|
|
|
|
October
1
|
March
31
|
As
at
|
Note
|
2017
|
2017
|
|
|
|
|
|
|
ASSETS
|
9
|
|
|
|
|
Current
assets
|
|
|
|
|
|
Cash and cash
equivalents
|
|
$
|
306,305
|
$
|
286,697
|
Accounts
receivable
|
|
|
182,781
|
|
166,069
|
Costs and earnings in
excess of billings
|
|
|
|
|
|
|
on contracts in
progress
|
4
|
|
133,675
|
|
144,708
|
Inventories
|
4
|
|
54,767
|
|
47,981
|
Deposits, prepaids
and other assets
|
5
|
|
23,483
|
|
16,119
|
|
|
|
701,011
|
|
661,574
|
Non-current
assets
|
|
|
|
|
|
Property, plant and
equipment
|
|
|
71,018
|
|
69,233
|
Other
assets
|
6
|
|
4,203
|
|
13,291
|
Goodwill
|
|
|
430,310
|
|
423,250
|
Intangible
assets
|
|
|
149,697
|
|
156,069
|
Deferred income tax
assets
|
|
|
1,271
|
|
2,138
|
Investment tax credit
receivable
|
|
|
49,653
|
|
49,015
|
|
|
|
706,152
|
|
712,996
|
Total
assets
|
|
$
|
1,407,163
|
$
|
1,374,570
|
|
|
|
|
|
|
LIABILITIES AND
EQUITY
|
|
|
|
|
|
Current
liabilities
|
|
|
|
|
|
Bank
indebtedness
|
9
|
$
|
1,139
|
$
|
1,411
|
Accounts payable and
accrued liabilities
|
|
|
192,841
|
|
183,839
|
Provisions
|
8
|
|
15,852
|
|
14,124
|
Billings in excess of
costs and earnings
|
|
|
|
|
|
|
on contracts in
progress
|
4
|
|
96,010
|
|
96,490
|
Current portion of
long-term debt
|
9
|
|
843
|
|
1,321
|
|
|
|
306,685
|
|
297,185
|
Non-current
liabilities
|
|
|
|
|
|
Employee
benefits
|
|
|
26,702
|
|
26,668
|
Long-term
debt
|
9
|
|
303,838
|
|
325,947
|
Deferred income tax
liabilities
|
|
|
38,356
|
|
38,761
|
Other long-term
liabilities
|
10
|
|
14,714
|
|
––
|
|
|
|
383,610
|
|
391,376
|
Total
liabilities
|
|
$
|
690,295
|
$
|
688,561
|
|
|
|
|
|
|
Commitments and
contingencies
|
9, 14
|
|
|
|
|
|
|
|
|
|
|
EQUITY
|
|
|
|
|
|
Share
capital
|
11
|
$
|
543,604
|
$
|
543,317
|
Contributed
surplus
|
|
|
13,496
|
|
12,871
|
Accumulated other
comprehensive income
|
|
|
59,574
|
|
54,974
|
Retained
earnings
|
|
|
99,924
|
|
74,599
|
Equity attributable
to
shareholders
|
|
|
716,598
|
|
685,761
|
Non-controlling
interests
|
|
|
270
|
|
248
|
Total
equity
|
|
|
716,868
|
|
686,009
|
Total liabilities
and
equity
|
|
$
|
1,407,163
|
$
|
1,374,570
|
ATS AUTOMATION
TOOLING SYSTEMS INC. Interim Consolidated Statements of
Income (in thousands of Canadian dollars, except per share
amounts - unaudited)
|
|
|
|
|
|
|
Three months
ended
|
Six months
ended
|
|
|
October
1
|
October
2
|
October
1
|
October
2
|
|
Note
|
2017
|
2016
|
2017
|
2016
|
|
|
|
|
|
|
|
|
|
Revenues
|
|
|
|
|
|
|
|
|
|
|
Revenues from
construction contracts
|
|
$
|
161,468
|
$
|
144,695
|
$
|
305,291
|
$
|
309,635
|
|
Sale of
goods
|
|
|
20,065
|
|
20,206
|
|
38,932
|
|
38,790
|
|
Services
rendered
|
|
|
93,418
|
|
77,587
|
|
194,690
|
|
159,415
|
|
|
|
|
|
|
|
|
|
|
Total
revenues
|
|
|
274,951
|
|
242,488
|
|
538,913
|
|
507,840
|
|
|
|
|
|
|
|
|
|
|
Operating costs and
expenses
|
|
|
|
|
|
|
|
|
|
|
Cost of
revenues
|
|
|
204,182
|
|
181,786
|
|
401,315
|
|
382,343
|
|
Selling, general and
administrative
|
|
|
45,204
|
|
41,219
|
|
89,529
|
|
82,547
|
|
Stock-based
compensation
|
13
|
|
1,669
|
|
2,219
|
|
2,898
|
|
3,088
|
|
|
|
|
|
|
|
|
|
|
Earnings from
operations
|
|
|
23,896
|
|
17,264
|
|
45,171
|
|
39,862
|
|
|
|
|
|
|
|
|
|
|
Net finance
costs
|
16
|
|
6,147
|
|
6,339
|
|
12,342
|
|
12,979
|
|
|
|
|
|
|
|
|
|
|
Income before
income taxes
|
|
|
17,749
|
|
10,925
|
|
32,829
|
|
26,883
|
|
|
|
|
|
|
|
|
|
|
Income tax
expense
|
12
|
|
3,912
|
|
2,452
|
|
7,482
|
|
6,309
|
|
|
|
|
|
|
|
|
|
|
Net
income
|
|
$
|
13,837
|
$
|
8,473
|
$
|
25,347
|
$
|
20,574
|
|
|
|
|
|
|
|
|
|
|
Attributable
to
|
|
|
|
|
|
|
|
|
|
Shareholders
|
|
$
|
13,831
|
$
|
8,451
|
$
|
25,325
|
$
|
20,545
|
Non-controlling
interests
|
|
|
6
|
|
22
|
|
22
|
|
29
|
|
|
$
|
13,837
|
$
|
8,473
|
$
|
25,347
|
$
|
20,574
|
Earnings per
share
|
|
|
|
|
|
|
|
|
|
|
attributable to
shareholders
|
17
|
|
|
|
|
|
|
|
|
Basic and
diluted
|
|
$
|
0.15
|
$
|
0.09
|
$
|
0.27
|
$
|
0.22
|
ATS AUTOMATION
TOOLING SYSTEMS INC.
Interim Consolidated Statements of Comprehensive Income (in
thousands of Canadian dollars - unaudited)
|
|
|
|
|
Three months
ended
|
Six months
ended
|
|
October
1
|
October
2
|
October
1
|
October
2
|
|
2017
|
2016
|
2017
|
2016
|
|
|
|
|
|
|
|
|
|
Net
income
|
$
|
13,837
|
$
|
8,473
|
$
|
25,347
|
$
|
20,574
|
|
|
|
|
|
|
|
|
|
Other comprehensive
income (loss):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Items to be
reclassified subsequently to net income:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Currency translation
adjustment
|
|
|
|
|
|
|
|
|
|
|
(net of income taxes
of $nil)
|
|
(3,166)
|
|
4,872
|
|
7,167
|
|
(1,683)
|
|
|
|
|
|
|
|
|
|
|
Net unrealized gain
(loss) on derivative financial
|
|
|
|
|
|
|
|
|
|
|
instruments
designated as cash flow hedges
|
|
2,126
|
|
(849)
|
|
4,810
|
|
(1,462)
|
|
Tax impact
|
|
(547)
|
|
207
|
|
(1,259)
|
|
390
|
|
|
|
|
|
|
|
|
|
|
Loss (gain)
transferred to net income for derivatives
|
|
|
|
|
|
|
|
|
|
|
designated as cash
flow hedges
|
|
(340)
|
|
(20)
|
|
81
|
|
(330)
|
|
Tax impact
|
|
100
|
|
(1)
|
|
(4)
|
|
77
|
|
|
|
|
|
|
|
|
|
|
Cash flow hedge
reserve adjustment
|
|
(6,233)
|
|
1,772
|
|
(8,260)
|
|
1,404
|
|
Tax impact
|
|
1,558
|
|
(443)
|
|
2,065
|
|
(351)
|
|
|
|
|
|
|
|
|
|
Other
comprehensive income (loss)
|
|
(6,502)
|
|
5,538
|
|
4,600
|
|
(1,955)
|
|
|
|
|
|
|
|
|
|
Comprehensive
income
|
$
|
7,335
|
$
|
14,011
|
$
|
29,947
|
$
|
18,619
|
|
|
|
|
|
|
|
|
|
Attributable
to
|
|
|
|
|
|
|
|
|
Shareholders
|
$
|
7,329
|
$
|
13,989
|
$
|
29,925
|
$
|
18,590
|
Non-controlling
interests
|
|
6
|
|
22
|
|
22
|
|
29
|
|
$
|
7,335
|
$
|
14,011
|
$
|
29,947
|
$
|
18,619
|
ATS AUTOMATION
TOOLING SYSTEMS INC.
Interim Consolidated Statements of Changes in Equity (in
thousands of Canadian dollars - unaudited)
|
|
|
|
|
|
|
Six months ended
October 1, 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
|
|
––
|
|
––
|
|
25,325
|
|
––
|
|
––
|
|
––
|
|
22
|
|
25,347
|
Other comprehensive
income (loss)
|
|
––
|
|
––
|
|
––
|
|
7,167
|
|
(2,567)
|
|
4,600
|
|
––
|
|
4,600
|
Total comprehensive
income (loss)
|
|
––
|
|
––
|
|
25,325
|
|
7,167
|
|
(2,567)
|
|
4,600
|
|
22
|
|
29,947
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stock-based
compensation
|
|
––
|
|
704
|
|
––
|
|
––
|
|
––
|
|
––
|
|
––
|
|
704
|
Exercise of stock
options
|
|
287
|
|
(79)
|
|
––
|
|
––
|
|
––
|
|
––
|
|
––
|
|
208
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance, as at
October 1, 2017
|
$
|
543,604
|
$
|
13,496
|
$
|
99,924
|
$
|
62,671
|
$
|
(3,097)
|
$
|
59,574
|
$
|
270
|
$
|
716,868
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Six months ended
October 2, 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
|
|
––
|
|
––
|
|
20,545
|
|
––
|
|
––
|
|
––
|
|
29
|
|
20,574
|
Other comprehensive
loss
|
|
––
|
|
––
|
|
––
|
|
(1,683)
|
|
(272)
|
|
(1,955)
|
|
––
|
|
(1,955)
|
Total comprehensive
income (loss)
|
|
––
|
|
––
|
|
20,545
|
|
(1,683)
|
|
(272)
|
|
(1,955)
|
|
29
|
|
18,619
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-controlling
interests
|
|
––
|
|
––
|
|
(296)
|
|
––
|
|
––
|
|
––
|
|
––
|
|
(296)
|
Stock-based
compensation
|
|
––
|
|
1,176
|
|
––
|
|
––
|
|
––
|
|
––
|
|
––
|
|
1,176
|
Exercise of stock
options
|
|
2,792
|
|
(488)
|
|
––
|
|
––
|
|
––
|
|
––
|
|
––
|
|
2,304
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance, as at
October 2, 2016
|
$
|
530,976
|
$
|
13,889
|
$
|
60,883
|
$
|
64,799
|
$
|
1,565
|
$
|
66,364
|
$
|
244
|
$
|
672,356
|
ATS AUTOMATION
TOOLING SYSTEMS INC.
Interim Consolidated Statements of Cash Flows (in thousands
of Canadian dollars - unaudited)
|
|
|
|
|
|
|
Three months
ended
|
Six months
ended
|
|
|
October
1
|
October
2
|
October
1
|
October 2
|
|
Note
|
2017
|
2016
|
2017
|
2016
|
|
|
|
|
|
|
|
|
Operating
activities
|
|
|
|
|
|
|
|
|
|
Net
income
|
|
$
|
13,837
|
$
|
8,473
|
$
|
25,347
|
$
|
20,574
|
Items not involving
cash
|
|
|
|
|
|
|
|
|
|
|
Depreciation of
property, plant and equipment
|
|
|
2,563
|
|
2,314
|
|
5,049
|
|
4,613
|
|
Amortization of
intangible assets
|
|
|
6,375
|
|
5,641
|
|
12,765
|
|
12,253
|
|
Deferred income
taxes
|
12
|
|
(985)
|
|
125
|
|
(123)
|
|
1,582
|
|
Other items not
involving cash
|
|
|
710
|
|
(721)
|
|
749
|
|
(3,137)
|
|
Stock-based
compensation
|
13
|
|
1,669
|
|
2,219
|
|
2,898
|
|
3,088
|
|
Loss (gain) on
disposal of property, plant and
|
|
|
|
|
|
|
|
|
|
|
|
equipment
|
|
|
(290)
|
|
90
|
|
(266)
|
|
94
|
|
|
|
23,879
|
|
18,141
|
|
46,419
|
|
39,067
|
Change in non-cash
operating working capital
|
|
|
13,790
|
|
(14,322)
|
|
(12,109)
|
|
22,276
|
Cash flows
provided by operating activities
|
|
$
|
37,669
|
$
|
3,819
|
$
|
34,310
|
$
|
61,343
|
|
|
|
|
|
|
|
|
|
|
Investing
activities
|
|
|
|
|
|
|
|
|
|
Acquisition of
property, plant and equipment
|
|
$
|
(3,869)
|
$
|
(2,443)
|
$
|
(7,177)
|
$
|
(4,289)
|
Acquisition of
intangible
assets
|
|
|
(2,073)
|
|
(1,835)
|
|
(2,928)
|
|
(3,272)
|
Proceeds from
disposal of property,
|
|
|
|
|
|
|
|
|
|
|
plant and
equipment
|
|
|
521
|
|
88
|
|
536
|
|
119
|
Cash flows used in
investing
activities
|
|
$
|
(5,421)
|
$
|
(4,190)
|
$
|
(9,569)
|
$
|
(7,442)
|
|
|
|
|
|
|
|
|
|
|
Financing
activities
|
|
|
|
|
|
|
|
|
|
Bank
indebtedness
|
|
$
|
170
|
$
|
520
|
$
|
(250)
|
$
|
(235)
|
Repayment of
long-term
debt
|
|
|
(1,161)
|
|
(121)
|
|
(1,509)
|
|
(265)
|
Proceeds from
long-term
debt
|
|
|
91
|
|
236
|
|
97
|
|
302
|
Proceeds from
exercise of options
|
|
|
––
|
|
1,778
|
|
208
|
|
2,304
|
Cash flows
provided by (used in)
|
|
|
|
|
|
|
|
|
|
|
financing
activities
|
|
$
|
(900)
|
$
|
2,413
|
$
|
(1,454)
|
$
|
2,106
|
|
|
|
|
|
|
|
|
|
|
Effect of exchange
rate changes on cash
|
|
|
|
|
|
|
|
|
|
|
and cash
equivalents
|
|
|
(4,401)
|
|
2,064
|
|
(3,679)
|
|
597
|
|
|
|
|
|
|
|
|
|
|
Increase in cash and
cash
equivalents
|
|
|
26,947
|
|
4,106
|
|
19,608
|
|
56,604
|
|
|
|
|
|
|
|
|
|
|
Cash and cash
equivalents, beginning of
period
|
|
|
279,358
|
|
222,532
|
|
286,697
|
|
170,034
|
|
|
|
|
|
|
|
|
|
|
Cash and cash
equivalents, end of period
|
|
$
|
306,305
|
$
|
226,638
|
$
|
306,305
|
$
|
226,638
|
|
|
|
|
|
|
|
|
|
|
Supplemental
information
|
|
|
|
|
|
|
|
|
|
Cash income taxes
paid
|
|
$
|
1,899
|
$
|
2,241
|
$
|
5,356
|
$
|
6,646
|
Cash interest
paid
|
|
$
|
788
|
$
|
926
|
$
|
10,695
|
$
|
12,162
|
SOURCE ATS Automation Tooling Systems Inc.