CAMBRIDGE, ON, May 16, 2019 /CNW/ - ATS Automation Tooling
Systems Inc. (TSX: ATA) ("ATS" or the "Company") today
reported financial results for the three and twelve months ended
March 31, 2019.
Fourth quarter highlights:
- Revenues increased 17% to $348.6
million. Organic growth in revenues was 13% with 4% coming
from acquisitions.
- Earnings from operations were $30.3
million (9% operating margin), compared to $25.5 million (9% operating margin) a year
ago.
- Adjusted earnings from operations1 were $38.2 million (11% margin), compared to
$32.8 million (11% margin) a year
ago.
- EBITDA1 was $42.6
million (12% EBITDA margin), compared to $34.8 million (12% EBITDA margin) a year
ago.
- Earnings per share were 20 cents
basic and diluted compared to 16
cents a year ago. Adjusted basic earnings per
share1 were 26 cents
compared to 22 cents a year ago.
- Order Bookings were $298 million,
14% lower than a year ago. Excluding acquired businesses, fourth
quarter Order Bookings were $269
million.
- Order Backlog increased 21% to $904
million at March 31, 2019
compared to $746 million a year
ago.
"Our fourth quarter featured growth in revenues and earnings as
we continued to execute our value creation strategy and drive
continuous improvement through our ABM," said Andrew Hider, Chief Executive Officer. "On
February 28, we added significant
capability by completing the acquisition of Comecer S.p.A., a
leader in advanced aseptic containment and processing systems for
the nuclear medicine and pharmaceutical industries. Coupled with
our existing business serving life science customers, we have
created a sizeable new platform that we intend to grow organically
and inorganically in the coming years."
Annual fiscal 2019 highlights:
- Revenues increased 12% to a record $1,253.6 million. Organic growth in revenues was
11% with 1% coming from acquisitions.
- Earnings from operations were $114.8
million (9% operating margin), compared to $85.5 million (8% operating margin) in the prior
year.
- Adjusted earnings from operations1 were $142.8 million (11% margin), compared to
$117.3 million (11% margin) in the
prior year.
- EBITDA1 was $157.2
million (13% EBITDA margin), compared to $122.1 million (11% EBITDA margin) in the prior
year.
- Earnings per share increased 52% to 76
cents basic from 50 cents.
Adjusted basic earnings per share1 grew 32% to
98 cents from 74 cents.
- Order Bookings increased 19% to a record $1.408 billion. Organic growth in Order Bookings
was 16% with 3% coming from acquisitions.
Mr. Hider added, "Fiscal 2019 was a successful year with
positive momentum leading to solid organic growth through the
addition of new customers and the expansion of long-term customer
relationships in our diversified markets. This performance
reflected the hard work and dedication of our team and their
ongoing commitment to the ATS Business Model. Going forward, we
have significant Order Backlog and a strong balance sheet which we
continue to put to work through internal investment, innovation,
strategic acquisitions and share repurchases when appropriate."
Financial results
(In millions of dollars unless
otherwise stated)
|
|
3 months
ended
March 31,
2019
|
|
3 months
ended
March 31,
2018
|
|
12 months
ended
March 31,
2019
|
|
12 months
ended
March 31,
2018
|
Revenues
|
|
$
|
348.6
|
|
$
|
298.4
|
|
$
|
1,253.6
|
|
$
|
1,114.9
|
Earnings from
operations
|
|
$
|
30.3
|
|
$
|
25.5
|
|
$
|
114.8
|
|
$
|
85.5
|
Adjusted earnings
from operations1
|
|
$
|
38.2
|
|
$
|
32.8
|
|
$
|
142.8
|
|
$
|
117.3
|
EBITDA1
|
|
$
|
42.6
|
|
$
|
34.8
|
|
$
|
157.2
|
|
$
|
122.1
|
Net
income
|
|
$
|
18.2
|
|
$
|
15.0
|
|
$
|
70.8
|
|
$
|
47.2
|
Adjusted basic
earnings per share1
|
|
$
|
0.26
|
|
$
|
0.22
|
|
$
|
0.98
|
|
$
|
0.74
|
Basic earnings per
share
|
|
$
|
0.20
|
|
$
|
0.16
|
|
$
|
0.76
|
|
$
|
0.50
|
Diluted earnings
per share
|
|
$
|
0.20
|
|
$
|
0.16
|
|
$
|
0.75
|
|
$
|
0.50
|
1 Non-IFRS
measure: see "Notice to Reader: Non-IFRS Measures and Additional
IFRS Measures".
|
Fourth Quarter
Fiscal 2019 fourth quarter revenues
were 17% higher than in the corresponding period a year ago and
included $10.5 million of revenues
earned by KMW and Comecer since acquisition. Excluding KMW and
Comecer, fourth quarter revenues were $338.1
million, a 13% increase compared to the corresponding period
a year ago, primarily reflecting Order Backlog, which was 34%
higher entering the fourth quarter of fiscal 2019 compared to a
year ago. Revenues generated from construction contracts and from
services both increased 17% compared to a year ago.
By market, revenues generated in the life sciences market
increased by 46% due to higher Order Backlog entering the fourth
quarter of fiscal 2019 on improved Order Bookings in the year from
both new and existing customers and, to a lesser extent, revenues
earned by Comecer since acquisition on February 28, 2019. Revenues in the transportation
market increased 18% primarily related to an EV enterprise program
awarded in the first quarter of fiscal 2019 and revenues from KMW.
Fiscal 2019 fourth quarter revenues from consumer products &
electronics decreased 29% compared to a year ago, due to lower
Order Backlog entering the fourth quarter of fiscal 2019. Revenues
generated in the energy market decreased 17% primarily due to the
timing of program execution.
Fiscal 2019 fourth quarter earnings from operations were
$30.3 million (9% operating margin)
compared to $25.5 million (9%
operating margin) in the fourth quarter of fiscal 2018. Fourth
quarter fiscal 2019 earnings from operations included $1.1 million of incremental costs related to the
Company's acquisition activity and $6.8
million related to amortization of identifiable intangible
assets recorded on business acquisitions. Included in fourth
quarter fiscal 2018 earnings from operations were $2.2 million of restructuring costs and
$5.1 million related to amortization
of identifiable intangible assets recorded on business
acquisitions. Excluding these items in both comparable quarters,
fourth quarter fiscal 2019 adjusted earnings from operations were
$38.2 million (11% margin), compared
to adjusted earnings from operations of $32.8 million (11% margin) a year ago. Fourth
quarter fiscal 2019 adjusted earnings from operations reflected
higher revenues and improved gross margin, offset by higher
selling, general and administrative expenses, and increased stock
compensation expenses (see "Stock-based compensation").
Depreciation and amortization expense was $12.3 million in the fourth quarter of fiscal
2019, compared to $9.3 million a year
ago. The increase primarily reflected depreciation of internal
development projects and incremental amortization of
acquisition-related intangible assets due to the acquisitions of
KMW and Comecer.
EBITDA was $42.6 million (12%
EBITDA margin) in the fourth quarter of fiscal 2019 compared to
$34.8 million (12% EBITDA margin) in
the fourth quarter of fiscal 2018. EBITDA growth primarily
reflected higher revenues and improved gross margin, partially
offset by higher selling, general and administrative expenses and
stock compensation expenses compared to a year ago. Excluding
acquisition related costs, fourth quarter fiscal 2019 EBITDA was
$43.7 million (13% EBITDA margin).
Comparably, excluding restructuring costs, fourth quarter fiscal
2018 EBITDA was $37.0 million (12%
EBITDA margin).
Order Backlog Continuity
(In millions of dollars)
|
|
|
Q4
2019
|
|
|
Q4 2018
|
|
|
Fiscal
2019
|
|
|
Fiscal
2018
|
Opening Order
Backlog
|
|
$
|
926
|
|
$
|
689
|
|
$
|
746
|
|
$
|
681
|
Revenues
|
|
|
(349)
|
|
|
(298)
|
|
|
(1,254)
|
|
|
(1,115)
|
Order
Bookings
|
|
|
298
|
|
|
348
|
|
|
1,408
|
|
|
1,182
|
Order Backlog
adjustments1
|
|
|
29
|
|
|
7
|
|
|
4
|
|
|
(2)
|
Total
|
|
$
|
904
|
|
$
|
746
|
|
$
|
904
|
|
$
|
746
|
1 Order Backlog adjustments include
incremental Order Backlog of $2 million and $60 million acquired
with KMW and Comecer respectively, foreign exchange adjustments and
cancellations.
|
Order Bookings
Fourth quarter fiscal 2019 Order
Bookings were $298 million, 14% lower
than fourth quarter fiscal 2018 Order Bookings. Excluding KMW and
Comecer, fourth quarter Order Bookings were $269 million, which primarily reflected lower
consumer products & electronics and transportation Order
Bookings compared to the prior year period when certain enterprise
Order Bookings were recorded in those markets.
Order Backlog
At March 31,
2019, Order Backlog was $904
million, 21% higher than at March 31,
2018. Order Backlog growth was primarily driven by higher
Order Bookings in the life sciences and transportation markets in
fiscal 2019 and Order Backlog from acquired businesses. Foreign
exchange rate changes negatively impacted the translation of Order
Backlog from foreign-based ATS subsidiaries by approximately 2%
compared to fiscal 2018.
Business Acquisition: Comecer
On February 28, 2019, the Company completed its
acquisition of Comecer S.p.A. ("Comecer"), a leader in the design,
engineering, manufacture, and servicing of advanced aseptic
containment and processing systems for the nuclear medicine and
pharmaceutical industries. The total cash purchase price for the
acquisition was 113 million Euro,
subject to working capital and net debt adjustments. Cash
consideration paid in the fourth quarter of fiscal 2019 was
95 million Euro. Integration of
Comecer will target revenue synergies through cross selling,
geographic expansion and commercial process best practices.
Integration will also include the deployment of the ATS Business
Model ("ABM"), which is intended to enable improvements in
operations including project management, supply chain and product
life cycle management.
Quarterly Conference Call
ATS' quarterly conference
call begins at 10:00 a.m. eastern on
Thursday May 16, 2019, and can be
accessed live at www.atsautomation.com or on the phone by dialing
(647) 427-7450 five minutes prior to the scheduled start time. 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 1034078 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, pharmaceuticals, chemicals, electric
vehicles, transportation, consumer products, electronics, food,
beverage, energy, and oil and gas. Founded in 1978, ATS employs
approximately 4,400 people at 23 manufacturing facilities and over
50 offices in North America,
Europe, Southeast Asia and China. The Company's shares are traded on the
Toronto Stock Exchange under the symbol ATA. Visit the
Company's website at www.atsautomation.com.
Management's Discussion and Analysis
For the Year
Ended March 31, 2019
This Management's Discussion and Analysis ("MD&A") for
the year ended March 31, 2019 (fiscal
2019) is as of May 15, 2019 and
provides information on the operating activities, performance and
financial position of ATS Automation Tooling Systems Inc. ("ATS" or
the "Company") and should be read in conjunction with the audited
consolidated financial statements of the Company for fiscal 2019,
which have been prepared in accordance with International Financial
Reporting Standards ("IFRS") and are reported in Canadian dollars.
Additional information is contained in the Company's filings with
Canadian securities regulators, including its Annual Information
Form, found on SEDAR at www.sedar.com and on the Company's website
at www.atsautomation.com.
Notice to reader: Non-IFRS measures and additional IFRS
measures
Throughout this document, management uses certain
non-IFRS measures to evaluate the performance of the Company. 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, contract assets, inventories, deposits,
prepaids and other assets, less accounts payable, accrued
liabilities, provisions and contract liabilities. 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
that 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' 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 provide 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 that 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.
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 12-month periods ended March 31, 2019 and March
31, 2018, 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 12-month periods ended March 31,
2019 and March 31, 2018 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, pharmaceuticals, chemicals, electric
vehicles, transportation, consumer products, electronics, food,
beverage, energy, and oil and gas. Founded in 1978, ATS employs
approximately 4,400 people at 23 manufacturing facilities and over
50 offices in North America,
Europe, Southeast Asia and China.
STRATEGY
To drive the creation of long-term
sustainable shareholder value, the Company has developed 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 advancement of the ATS Business Model
("ABM"), the pursuit and measurement of value drivers and key
performance indicators, a rigorous 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 ABM, providing innovation and value to the
Company's customers and markets, and growing the Company's
recurring revenue.
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 strategic and disciplined acquisitions
that strengthen ATS' business.
The Company pursues these initiatives with a focus on strategic
capital allocation in order to drive the creation of long-term
sustainable shareholder value.
ATS Business Model
The ABM is a business management
system that ATS has developed with the goal of enabling the Company
to pursue its strategies, outpace its chosen markets, and drive
year-over-year continuous improvement. The ABM brings focus to:
- People: developing, engaging and empowering ATS' people
to build the best team;
- Process: alignment of ATS people to implement and
continuously improve robust and disciplined business processes
throughout the organization; and
- Performance: consistently measuring results in order to
yield world-class performance for our customers and
shareholders.
The ABM is ATS' playbook, serving as the framework utilized by
the Company to achieve its business goals and objectives through
disciplined, continuous improvement. The ABM has been rolled out
across ATS divisions globally, supported with extensive training in
the use of key problem-solving tools, and applied through various
projects to drive continuous improvement. Management is now
deploying additional tools as part of the ongoing advancement of
ABM.
Focus areas include:
- Strengthening the core: adopting a customer-first
mindset; implementing a robust performance management system;
adhering to eight value drivers; managing using Key Performance
Indicators; and leveraging daily management to measure at the point
of impact;
- Delivering growth: alignment with customer success;
focusing on organizational talent development; constantly
confirming that progress is being made toward stated goals; and
developing annual operating and capital deployment plans for each
ATS division;
- Pursuing excellence: deploying specific goals that
segment strategies into relevant focus areas; and improving
continuously using Kaizen events, problem solving and other
continuous improvement initiatives, which increase performance
annually; and
- Pioneering innovation: driving automation market
technology leadership; creating innovative platforms and analytics
that benefit customers by reducing complexity, shortening
development cycles and improving production efficiencies; and
expanding the reach and scope of ATS' capabilities for competitive
advantage.
BUSINESS OVERVIEW
ATS and its subsidiaries serve
customers in the following markets: life sciences, pharmaceuticals,
nuclear medicine, chemicals, electric vehicles, transportation,
consumer products, electronics, food, beverage, energy, and oil and
gas. With broad and in-depth knowledge across multiple industries
and technical fields, ATS delivers single-source solutions to
customers that lower their production costs, accelerate delivery of
their products, and improve quality control. ATS engages with
customers on both greenfield programs, such as equipping new
factories, and brownfield programs, such as capacity expansions,
line moves, equipment upgrades, software upgrades, efficiency
improvements and factory optimization.
ATS engages at varying points in customers' automation cycles.
During the pre-automation phase, ATS offers comprehensive services,
including discovery and analysis, concept development, simulation
and total cost of ownership modelling, all of which help to verify
the feasibility of different types of automation, set objectives
for factors such as line speed and yield, assess production
processes for manufacturability and calculate the total cost of
ownership.
For customers that have decided to proceed with an automation
project, ATS offers specialized equipment for specific applications
or industrial markets, as well as a number of automation and
integration services, including engineering design, prototyping,
process verification, specification writing, software and
manufacturing process controls development, equipment design and
build, standard automation products/platforms, third-party
equipment qualification, procurement and integration, automation
system installation, product line commissioning, validation and
documentation. Following the installation of custom automation, ATS
may supply duplicate or repeat automation systems to customers that
leverage engineering design completed in the original customer
program. For customers seeking complex equipment production or
build-to-print manufacturing, ATS provides value engineering,
supply chain management, integration and manufacturing
capabilities, and other automation products and solutions.
Post automation, ATS offers a number of services, including
customer training, process optimization, preventative maintenance,
emergency and on-call support, spare parts, retooling, retrofits
and equipment relocation. Service agreements are often attached at
the time of new equipment sale or are available on an after-market
basis on installed equipment. The Company employs a service
strategy to increase the revenue derived from these activities. To
enhance its service offering, the Company recently unveiled
IlluminateTM Manufacturing Intelligence, a
system that captures, analyzes and uses real time machine
performance data to quickly and accurately troubleshoot, deliver
process and product solutions, prevent equipment downtime, drive
greater operational efficiency and unlock performance for
sustainable production improvements.
Contract values for individual automation systems vary and are
often in excess of $1 million, with
some contracts for enterprise-type programs well in excess of
$10 million. Due to the custom nature
of customer projects, contract durations vary, with typical
durations ranging from six to 12 months, and some larger contracts
extending up to 18 to 24 months. Contract values for pre-automation
services and post-automation services range in value and can exceed
$1 million with varying durations,
which can sometimes extend over a number of years.
Competitive strengths
Management believes ATS has the following competitive
strengths:
Global presence, size and critical mass: ATS'
global presence and scale provide advantages in serving
multinational customers, as many of the Company's competitors are
smaller and operate with a narrower geographic and/or industrial
market focus. ATS has manufacturing operations in Canada, the United
States, Germany,
Italy, Netherlands, China and Thailand. ATS can deliver localized service
through a network of over 50 locations around the world. Management
believes that ATS' scale and global footprint provide it with
competitive advantages in winning large, multinational customer
programs and in delivering a life-cycle-oriented service platform
to customers' global operations.
Technical skills, capabilities and
experience: ATS has designed, manufactured, assembled
and serviced over 24,000 automation systems worldwide and has an
extensive knowledge base and accumulated design expertise.
Management believes ATS' broad experience in many different
industrial markets and with diverse technologies, its talented
workforce, which includes over 1,700 engineers and over
200 program management personnel, and its ability to provide
custom automation, repeat automation, automation products and
value-added services, position the Company well to serve complex
customer programs in a variety of markets.
Product and technology portfolio: Through its
history of bringing thousands of unique automation projects to
market, ATS has developed an extensive product and technology
portfolio. ATS has a number of standard automation platforms and
products, including: innovative linear motion transport systems;
robust cam-driven assembly platforms; advanced vision systems used
to ensure product or process quality; progressive material handling
technologies; test systems; factory management and intelligence
software; and other software solutions; aseptic processing and
containment technologies and high-performance tube filling and
cartoning systems. Management believes the Company's extensive
product and technology portfolio provides advantages in developing
unique and leading solutions for customers and in maintaining
competitiveness.
Recognized brands: Management believes ATS is
well known within the global automation industry due to its long
history of innovation and broad scope of operations. In addition,
ATS' subsidiaries include several strong brands: "sortimat", which
specializes in the life sciences market; "IWK", which specializes
in the packaging market; "Process Automation Solutions" ("PA"),
which provides innovative automation solutions for process and
production sectors; "KMW", which specializes in custom
micro-assembly systems and test equipment solutions; and "Comecer",
which provides high-tech automation systems for the nuclear
medicine and pharmaceutical industries. Management believes that
ATS' brand names and global reputation improve sales prospecting,
allowing the Company to be considered for a wide variety of
customer programs.
Trusted customer relationships: ATS
serves some of the world's largest multinational companies. Most
customer relationships are long-standing, often spanning a decade
or more, and many customers are repeat buyers who return to ATS and
its subsidiaries time after time to meet their automation
manufacturing, assembly, processing, and services' needs.
Total solutions
capabilities: Management believes the Company
gains competitive advantages because ATS provides total turnkey
solutions in automation. This allows customers to single-source
their most complex projects to ATS rather than rely on multiple
engineering firms and equipment builders. In addition, ATS can
provide customers with other value-added services including
pre-automation consulting, total cost of ownership studies,
life-cycle material management, post-automation service, training
and support.
OVERVIEW – OPERATING RESULTS
Consolidated
Revenues
(In millions of dollars)
Revenues by
market
|
|
Q4
2019
|
|
Q4 2018
|
|
Fiscal
2019
|
|
Fiscal
2018
|
Life
sciences
|
|
$
|
193.1
|
|
$
|
132.2
|
|
$
|
608.5
|
|
$
|
518.0
|
Transportation
|
|
82.3
|
|
69.8
|
|
302.3
|
|
299.4
|
Consumer products
& electronics
|
|
39.2
|
|
55.6
|
|
203.3
|
|
160.6
|
Energy
|
|
34.0
|
|
40.8
|
|
139.5
|
|
136.9
|
Total
revenues
|
|
$
|
348.6
|
|
$
|
298.4
|
|
$
|
1,253.6
|
|
$
|
1,114.9
|
|
|
|
|
|
|
|
|
|
Revenues by
customer location
|
|
Q4
2019
|
|
Q4 2018
|
|
Fiscal
2019
|
|
Fiscal
2018
|
North
America
|
|
$
|
137.6
|
|
$
|
138.0
|
|
$
|
510.5
|
|
$
|
528.5
|
Europe
|
|
186.4
|
|
111.8
|
|
600.4
|
|
410.5
|
Asia/Other
|
|
24.6
|
|
48.6
|
|
142.7
|
|
175.9
|
Total
revenues
|
|
$
|
348.6
|
|
$
|
298.4
|
|
$
|
1,253.6
|
|
$
|
1,114.9
|
Fourth Quarter
Fiscal 2019 fourth quarter revenues
were 17% higher than in the corresponding period a year ago and
included $10.5 million of revenues
earned by KMW and Comecer since acquisition. Excluding KMW and
Comecer, fourth quarter revenues were $338.1
million, a 13% increase compared to the corresponding period
a year ago, primarily reflecting Order Backlog, which was 34%
higher entering the fourth quarter of fiscal 2019 compared to a
year ago. Revenues generated from construction contracts and from
services both increased 17% compared to the corresponding period a
year ago.
By market, revenues generated in the life sciences market
increased by 46% due to higher Order Backlog entering the fourth
quarter of fiscal 2019 on improved Order Bookings in the year from
both new and existing customers and, to a lesser extent, revenues
earned by Comecer since acquisition on February 28, 2019. Revenues in the transportation
market increased 18% primarily related to an EV enterprise program
awarded in the first quarter of fiscal 2019 and revenues from KMW.
Fiscal 2019 fourth quarter revenues from consumer products &
electronics decreased 29% compared to a year ago, due to lower
Order Backlog entering the fourth quarter of fiscal 2019. Revenues
generated in the energy market decreased 17% primarily due to the
timing of program execution.
Full Year
Fiscal 2019 revenues were $1,253.6 million, 12% higher than in the prior
fiscal year and included $12.8
million of revenues earned by KMW and Comecer since
acquisition. Excluding KMW and Comecer, fiscal 2019 revenues
were $1,240.8 million, an 11%
increase compared to the corresponding period a year ago, primarily
reflecting Order Backlog, which was 10% higher entering fiscal 2019
compared to a year ago, and Order Bookings, which increased 19% in
fiscal 2019 compared to a year ago.
By market, fiscal 2019 year-to-date revenues from consumer
products & electronics, life sciences, energy, and the
transportation markets increased 27%, 17%, 2%, and 1% respectively,
primarily reflecting higher Order Backlog entering fiscal 2019, and
higher life sciences and transportation market Order Bookings in
fiscal 2019 compared to a year ago.
Consolidated Operating Results
(In millions of
dollars)
|
|
Q4 2019
|
|
Q4 2018
|
|
Fiscal
2019
|
|
Fiscal 2018
|
Earnings from
operations
|
|
$
|
30.3
|
|
$
|
25.5
|
|
$
|
114.8
|
|
$
|
85.5
|
Amortization of
acquisition-related intangible assets
|
|
6.8
|
|
5.1
|
|
23.3
|
|
20.6
|
Restructuring
charges
|
|
-
|
|
2.2
|
|
-
|
|
11.2
|
Acquisition-related
transaction costs
|
|
1.1
|
|
─
|
|
4.7
|
|
─
|
Adjusted earnings
from operations1
|
|
$
|
38.2
|
|
$
|
32.8
|
|
$
|
142.8
|
|
$
|
117.3
|
1 See
"Notice to Reader: Non-IFRS Measures and Additional IFRS
Measures."
|
|
|
|
|
|
|
|
|
|
|
Q4
2019
|
|
Q4
2018
|
|
Fiscal
2019
|
|
Fiscal
2018
|
Earnings from
operations
|
|
$
|
30.3
|
|
$
|
25.5
|
|
$
|
114.8
|
|
$
|
85.5
|
Depreciation and
amortization
|
|
12.3
|
|
9.3
|
|
42.4
|
|
36.6
|
EBITDA2
|
|
$
|
42.6
|
|
$
|
34.8
|
|
$
|
157.2
|
|
$
|
122.1
|
2 See
"Notice to Reader: Non-IFRS Measures and Additional IFRS
Measures."
|
Fourth Quarter
Fiscal 2019 fourth quarter earnings
from operations were $30.3 million
(9% operating margin) compared to $25.5
million (9% operating margin) in the fourth quarter of
fiscal 2018. Fourth quarter fiscal 2019 earnings from operations
included $1.1 million of incremental
costs related to the Company's acquisition activity and
$6.8 million related to amortization
of identifiable intangible assets recorded on business
acquisitions. Included in fourth quarter fiscal 2018 earnings from
operations were $2.2 million of
restructuring costs and $5.1 million
related to amortization of identifiable intangible assets recorded
on business acquisitions.
Excluding these items in both comparable quarters, fourth
quarter fiscal 2019 adjusted earnings from operations were
$38.2 million (11% margin), compared
to adjusted earnings from operations of $32.8 million (11% margin) a year ago. Fourth
quarter fiscal 2019 adjusted earnings from operations reflected
higher revenues and improved gross margin, offset by higher
selling, general and administrative expenses, and increased stock
compensation expenses (see "Stock-based compensation").
Depreciation and amortization expense was $12.3 million in the fourth quarter of fiscal
2019, compared to $9.3 million a year
ago. The increase primarily reflected depreciation of internal
development projects and incremental amortization of
acquisition-related intangible assets due to the acquisitions of
KMW and Comecer.
EBITDA was $42.6 million (12%
EBITDA margin) in the fourth quarter of fiscal 2019 compared to
$34.8 million (12% EBITDA margin) in
the fourth quarter of fiscal 2018. EBITDA growth primarily
reflected higher revenues and improved gross margin, partially
offset by higher selling, general and administrative expenses and
stock compensation expenses compared to a year ago. Excluding
acquisition related costs, fourth quarter fiscal 2019 EBITDA was
$43.7 million (13% EBITDA margin).
Comparably, excluding restructuring costs, fourth quarter fiscal
2018 EBITDA was $37.0 million (12%
EBITDA margin).
Full Year
Earnings from operations were $114.8 million (9% operating margin) in fiscal
2019, compared to $85.5 million (8%
operating margin) in the corresponding period a year ago. Excluding
$4.7 million of incremental costs
related to the Company's acquisition activity and $23.3 million related to amortization of
identifiable intangible assets recorded on business acquisitions,
adjusted earnings from operations were $142.8 million (11% operating margin) in fiscal
2019, compared to adjusted earnings from operations of $117.3 million (11% operating margin) in the
corresponding period a year ago. Higher adjusted earnings from
operations primarily reflected higher revenues and gross margin in
fiscal 2019, partially offset by higher selling, general and
administrative expenses, and stock compensation expenses compared
to a year ago.
Depreciation and amortization expense was $42.4 million in fiscal 2019 compared to
$36.6 million a year ago. The
increase primarily reflected depreciation of internal development
projects and amortization of acquisition-related intangible
assets.
Fiscal 2019 EBITDA was $157.2
million (13% EBITDA margin) compared to $122.1 million (11% EBITDA margin) in fiscal
2018. Excluding acquisition related costs, fiscal 2019 EBITDA was
$161.9 million (13% EBITDA margin).
Comparably, excluding restructuring costs, fiscal 2018 EBITDA was
$133.3 million (12% EBITDA
margin).
Order Bookings by Quarter
(In millions of dollars)
|
|
Fiscal
2019
|
|
Fiscal
2018
|
Q
|
|
$
|
358
|
|
$
|
266
|
Q2
|
|
355
|
|
257
|
Q3
|
|
397
|
|
311
|
Q4
|
|
298
|
|
348
|
Total Order
Bookings
|
|
$
|
1,408
|
|
$
|
1,182
|
Fourth Quarter
Fourth quarter fiscal 2019 Order
Bookings were $298 million, 14% lower
than fourth quarter fiscal 2018 Order Bookings. Excluding KMW and
Comecer, fourth quarter Order Bookings were $269 million, which primarily reflected lower
consumer products & electronics and transportation Order
Bookings compared to the prior year period when certain enterprise
programs were recorded in those markets.
Full Year
Fiscal 2019 Order Bookings were
$1,408 million, a 19% increase over
prior year Order Bookings of $1,182
million. Organic growth in Order Bookings was 16% compared
to the prior year, and contributions from acquired businesses KMW
and Comecer accounted for 3% of the growth. By market, higher Order
Bookings in the life sciences and transportation markets more than
offset lower Order Bookings in the consumer products &
electronics market. Order Bookings in the energy market were flat.
Life sciences fiscal 2019 Order Bookings included a $60 million enterprise program from a global life
sciences customer for a fully automated manufacturing and packaging
system. Higher Order Bookings in the transportation market included
an $80 million enterprise program
from a global automotive manufacturer for an electric vehicle
program.
Order Backlog Continuity
(In millions of dollars)
|
|
Q4
2019
|
|
Q4 2018
|
|
Fiscal
2019
|
|
Fiscal
2018
|
Opening Order
Backlog
|
|
$
|
926
|
|
$
|
689
|
|
$
|
746
|
|
$
|
681
|
Revenues
|
|
(349)
|
|
(298)
|
|
(1,254)
|
|
(1,115)
|
Order
Bookings
|
|
298
|
|
348
|
|
1,408
|
|
1,182
|
Order Backlog
adjustments1
|
|
29
|
|
7
|
|
4
|
|
(2)
|
Total
|
|
$
|
904
|
|
$
|
746
|
|
$
|
904
|
|
$
|
746
|
1 Order Backlog adjustments include
incremental Order Backlog of $2 million and $60 million
acquired with KMW and Comecer respectively, foreign exchange
adjustments and cancellations.
|
Order Backlog by Market
(In millions of dollars)
As
at
|
|
Fiscal 2019
|
|
Fiscal 2018
|
Life
sciences
|
|
$
|
501
|
|
$
|
358
|
Transportation
|
|
244
|
|
188
|
Consumer products
& electronics
|
|
86
|
|
118
|
Energy
|
|
73
|
|
82
|
Total
|
|
$
|
904
|
|
$
|
746
|
At March 31, 2019, Order Backlog
was $904 million, 21% higher than at
March 31, 2018. Order Backlog
growth was primarily driven by higher Order Bookings in the life
sciences and transportation markets in fiscal 2019 and Order
Backlog from acquired businesses. Foreign exchange rate changes
negatively impacted the translation of Order Backlog from
foreign-based ATS subsidiaries by approximately 2% compared to
fiscal 2018.
Outlook
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. The global economic environment has
shown recent signs of slowing growth and geopolitical risks remain.
Ongoing trade negotiations and disputes between various
jurisdictions in which the Company does business may impact its
future sales and operations. Management will continue to closely
monitor ongoing global trade discussions which could impact the
Company and identify mitigation opportunities.
Funnel activity (which includes customer requests for proposal
and ATS identified customer opportunities) in life sciences remains
strong. Opportunities related to electric vehicles are significant,
however, customers are cautious in their approach to capital
investment. Funnel activity in energy is variable and this market
provides niche opportunities for ATS. Funnel activity in the
consumer products & electronics market remains low relative to
other customer markets. Overall, the Company's funnel remains
significant; however, conversion of opportunities into Order
Bookings is variable.
The Company's sales organization continues to work to engage
customers on enterprise-type solutions. Enterprise orders are
expected to provide ATS with more strategic customer relationships,
better program control and workload predictability and less
short-term 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 expects its Order Backlog of $904 million at the end of the fourth quarter of
fiscal 2019 to partially mitigate the impact of volatile Order
Bookings on revenues in the short term. The composition of the
Company's Order Backlog has changed in fiscal 2019, with the
addition of several large, enterprise programs that the Company has
won. These enterprise programs have longer periods of performance
and therefore longer revenue recognition cycles. In the first
quarter of fiscal 2020, management expects the conversion of Order
Backlog to revenues to be in the 35% to 40% range.
The services strategy is expected to add incremental revenues
over time as the attach rate of services' contracts on new
equipment increases and as the penetration of the installed base
improves. The Company is working to grow service revenues as a
percentage of overall revenues over time, which is expected to
provide some balance to the capital expenditure cycle of the
Company's customers but may not fully offset capital spending
volatility.
The initial roll-out of the ABM has been completed, which
included Company-wide training and deployment of tools to
standardize problem solving and continuous improvement processes.
As the initial ABM tools are implemented, management will deploy
additional tools as part of the ongoing advancement 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 is pursuing several initiatives with the goal of
expanding its adjusted earnings from operations margin over the
long-term including: growing the Company's higher margin
after-sales service business; improving global supply chain
management; increasing the use of standardized platforms and
technologies; growing revenues while leveraging the Company's
current cost structure; and the ongoing development and adoption of
the ABM.
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 below 10% although from time to time it could
reach up to 15% or greater due to normal volatility assocated with
the Company's project-based business.
In fiscal 2020, the Company expects to increase its investment
in capital assets and intangible assets to approximately
$60 million due to planned expansions
at several facilities in order to increase capacity. The actual
investment will depend upon timing of the expansions.
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.
ACQUISITIONS
Business Acquisition:
Comecer
On February 28, 2019,
the Company completed its acquisition of Comecer S.p.A.
("Comecer"), a leader in the design, engineering, manufacture, and
servicing of advanced aseptic containment and processing systems
for the nuclear medicine and pharmaceutical industries. Comecer is
primarily focused in radiopharmaceutical equipment, where it
supplies specialized radiation shielding systems used by customers
in the production, handling, and dispensing of radiopharmaceutical
drugs. Applications for this type of equipment include the
diagnosis and therapeutic treatment of several conditions including
various forms of cancer and cardiovascular disorders. Additionally,
Comecer provides equipment to support the aseptic processing,
filling and handling of specialized pharmaceuticals as well as
isolator and incubator equipment used in advanced therapy medicinal
production (ATMP), a regenerative cell therapy that uses patient
cells to grow new tissues. The addition of Comecer has strengthened
ATS' customer offering in both pharma and biopharma, and added an
innovative new platform in radiopharmaceuticals. Comecer's main
production facility is in Castel-Bolognese, Italy.
For the 2018 calendar year, Comecer generated revenues of
approximately 67 million Euro, with a
low double-digit EBITDA margin. The total cash purchase price for
the acquisition was 113 million Euro,
subject to working capital and net debt adjustments. Cash
consideration paid in the fourth quarter of fiscal 2019 was
95 million Euro. The acquisition has
been accounted for as a business combination with the Company as
the acquirer of Comecer. The purchase method of accounting has been
used and the earnings of Comecer were consolidated beginning from
the acquisition date. Integration of Comecer will target revenue
synergies through cross selling, geographic expansion and
commercial process best practices. Integration will also
include the deployment of the ABM, which is intended to enable
improvements in operations including project management, supply
chain management and product life cycle management. The acquisition
is aligned with ATS' strategy of expanding in attractive markets
and is expected to increase the Company's overall revenues
generated in life sciences to over 50% of consolidated
revenues.
Business Acquisition: KMW
On October 31, 2018, the Company completed its
acquisition of Konstruktion, Maschinen- & Werkzeugbau GmbH
& Co. KG, and KMW GmbH (collectively, "KMW"). KMW is a
supplier of custom micro-assembly systems and test equipment
solutions. KMW provides ATS with an internal source for
complementary conveyorized micro-assembly and test capabilities,
further enabling the Company to provide full automation solutions
and meet customer demands for a complete turnkey offering. The
addition of KMW's micro-assembly technology and expertise
strengthens ATS' current offerings in the EV market. The
acquisition is aligned with ATS' strategy of expanding its reach in
current and new markets. KMW is headquartered in Koblenz,
Germany.
In its fiscal year ended March 31,
2018, KMW had revenues of approximately 14.0 million Euro and an EBITDA margin of over
20%. The total purchase price was 18.3
million Euro. Cash consideration paid in the third quarter
was 16.4 million Euro with the
balance to be paid within 18 months from the acquisition date. The
cash consideration of the purchase price along with transaction
costs were funded with existing cash on hand. The acquisition
has been accounted for as a business combination with the Company
as the acquirer of KMW. The purchase method of accounting has been
used and the earnings of KMW were consolidated beginning from the
acquisition date.
CONSOLIDATED RESULTS
(In millions of dollars, except
per share data)
|
|
Q4
2019
|
|
Q4 2018
|
|
Fiscal
2019
|
|
Fiscal 2018
|
|
Fiscal 2017
|
Revenues
|
|
$
|
348.6
|
|
$
|
298.4
|
|
$
|
1,253.6
|
|
$
|
1,114.9
|
|
$
|
1,010.9
|
Cost of
revenues
|
|
256.0
|
|
219.9
|
|
924.9
|
|
826.8
|
|
760.3
|
Selling, general and
administrative
|
|
56.1
|
|
49.7
|
|
204.1
|
|
194.3
|
|
171.9
|
Stock-based
compensation
|
|
6.2
|
|
3.3
|
|
9.8
|
|
8.3
|
|
6.8
|
Earnings from
operations
|
|
$
|
30.3
|
|
$
|
25.5
|
|
$
|
114.8
|
|
$
|
85.5
|
|
$
|
71.9
|
Net finance
costs
|
|
$
|
5.8
|
|
$
|
5.6
|
|
$
|
20.9
|
|
$
|
23.8
|
|
$
|
25.6
|
Provision for income
taxes
|
|
6.3
|
|
4.9
|
|
23.1
|
|
14.5
|
|
11.3
|
Net
income
|
|
$
|
18.2
|
|
$
|
15.0
|
|
$
|
70.8
|
|
$
|
47.2
|
|
$
|
35.0
|
Basic earnings per
share
|
|
$
|
0.20
|
|
$
|
0.16
|
|
$
|
0.76
|
|
$
|
0.50
|
|
$
|
0.38
|
Diluted earnings
per share
|
|
$
|
0.20
|
|
$
|
0.16
|
|
$
|
0.75
|
|
$
|
0.50
|
|
$
|
0.38
|
From
operations:
|
|
|
|
|
|
|
|
|
|
|
Total
assets
|
|
|
|
|
|
$
|
1,688.8
|
|
$
|
1,542.2
|
|
$
|
1,374.6
|
Total cash and
short-term investments
|
|
|
|
|
|
$
|
224.5
|
|
$
|
330.1
|
|
$
|
286.7
|
Total
debt
|
|
|
|
|
|
$
|
348.7
|
|
$
|
318.2
|
|
$
|
328.7
|
Other non-current
liabilities
|
|
|
|
|
|
$
|
113.4
|
|
$
|
102.0
|
|
$
|
65.4
|
Revenues. At $348.6
million, consolidated revenues for the fourth quarter of
fiscal 2019 were $50.2 million, 17%
higher than the corresponding period a year ago. At $1,253.6 million, annual consolidated revenues
were $138.7 million, or 12% higher
than a year ago (see "Overview – Operating Results").
Cost of revenues. At $256.0
million, fourth quarter fiscal 2019 cost of revenues
increased compared to the corresponding period a year ago by
$36.1 million, or 16%, primarily due
to higher revenues. Annual cost of revenues of $924.9 million increased $98.1 million, or 12% primarily due to higher
revenues. Fourth quarter fiscal 2019 gross margin was 27% compared
to 26% in the corresponding period a year ago, due primarily to
improved program execution and operational utilization. Fiscal 2019
gross margin was 26%, consistent with fiscal 2018.
Selling, general and administrative ("SG&A")
expenses. SG&A expenses for the fourth quarter of
fiscal 2019 were $56.1 million, which
included $1.1 million of incremental
costs related to the Company's acquisition activity and
$6.8 million of amortization costs
related to the amortization of identifiable intangible assets
recorded on business acquisitions. Excluding these costs, SG&A
expenses were $48.2 million in the
fourth quarter of fiscal 2019. Comparably, SG&A expenses for
the fourth quarter of fiscal 2018 were $42.4
million, which excluded $5.1
million of amortization costs related to the amortization of
identifiable intangible assets recorded on business acquisitions
and $2.2 million of restructuring
costs. Higher SG&A expenses in the fourth quarter of fiscal
2019 primarily reflected the addition of KMW and Comecer, and
increased employee costs.
Fiscal 2019 SG&A expenses were $204.1
million compared to $194.3
million last year. Fiscal 2019 SG&A expenses included
$4.7 million of incremental costs
related to the Company's acquisition activity and $23.3 million of expenses related to the
amortization of identifiable intangible assets recorded on business
acquisitions. Excluding these costs, SG&A expenses were
$176.1 million for fiscal 2019.
Comparably, SG&A expenses for fiscal 2018 were $162.5 million, which excluded $11.2 million of restructuring costs, and
$20.6 million of expenses related to
the amortization of identifiable intangible assets recorded on
business acquisitions. Higher SG&A expenses in fiscal 2019
primarily reflected increased: employee costs; spend on information
technology systems and security; sales related expenses; and the
addition of KMW and Comecer.
Stock-based compensation. Stock-based compensation
expense amounted to $6.2 million in
the fourth quarter of fiscal 2019 compared to $3.3 million in the corresponding period a year
ago. Fiscal 2019 stock-based compensation expense was $9.8 million compared to $8.3 million 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 based on the Company's stock price.
Earnings from operations. For the three- and
12-month periods ended March 31,
2019, earnings from operations were $30.3 million (9% operating margin) and
$114.8 million (9% operating margin),
respectively, compared to earnings from operations of $25.5 million (9% operating margin) and
$85.5 million (8% operating margin)
in the corresponding periods a year ago (see "Overview – Operating
Results").
Net finance costs. Net finance costs were
$5.8 million in the fourth quarter of
fiscal 2019 compared to $5.6 million
a year ago. Fiscal 2019 finance costs were $20.9 million compared to $23.8 million a year ago. The decrease was
primarily due to higher interest income earned in fiscal 2019
compared to a year ago.
Income tax provision. For the three and 12 months ended
March 31, 2019, the Company's
effective income tax rates of 26% and 25% respectively, 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% for fiscal
2020.
Net income. Fiscal 2019 fourth quarter net income
was $18.2 million (20 cents per share basic and diluted), compared
to $15.0 million (16 cents per share basic and diluted) for the
fourth quarter of fiscal 2018. Adjusted basic earnings per
share were 26 cents in the fourth
quarter of fiscal 2019 compared to 22
cents for the fourth quarter of fiscal 2018 (see
"Reconciliation of Non-IFRS Measures to IFRS Measures").
Fiscal 2019 net income was $70.8
million (76 and 75 cents per
share basic and diluted) compared to $47.2
million (50 cents per share
basic and diluted) a year ago. Adjusted basic earnings per share
were 98 cents in fiscal 2019 compared
to 74 cents 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):
|
|
Fiscal 2019
|
Fiscal
2018
|
Fiscal
2017
|
EBITDA
|
|
$
|
157.2
|
$
|
122.1
|
$
|
106.5
|
Less: depreciation
and amortization expense
|
|
42.4
|
36.6
|
34.6
|
Earnings from
operations
|
|
$
|
114.8
|
$
|
85.5
|
$
|
71.9
|
Less: net finance
costs
|
|
20.9
|
23.8
|
25.6
|
Provision for income
taxes
|
|
23.1
|
14.5
|
11.3
|
Net
income
|
|
$
|
70.8
|
$
|
47.2
|
$
|
35.0
|
|
|
|
|
|
|
|
|
Q4
2019
|
Q4
2018
|
EBITDA
|
|
|
$
|
42.6
|
$
|
34.8
|
Less: depreciation
and amortization expense
|
|
|
12.3
|
9.3
|
Earnings from
operations
|
|
|
$
|
30.3
|
$
|
25.5
|
Less: net finance
costs
|
|
|
5.8
|
5.6
|
Provision for income
taxes
|
|
|
6.3
|
4.9
|
Net
income
|
|
|
$
|
18.2
|
$
|
15.0
|
The following table reconciles adjusted earnings from
operations, adjusted net income and adjusted basic earnings per
share to the most directly comparable IFRS measure (net income and
basic earnings per share):
|
Three Months Ended
March 31, 2019
|
Three Months Ended
March 31, 2018
|
|
IFRS
|
Adjustments
|
Adjusted
|
IFRS
|
Adjustments
|
Adjusted
|
|
|
|
(non-IFRS)
|
|
|
(non-IFRS)
|
Earnings from
operations
|
$
|
30.3
|
$
|
––
|
$
|
30.3
|
$
|
25.5
|
$
|
––
|
$
|
25.5
|
Amortization of
acquisition-
|
|
|
|
|
|
|
related intangible
assets
|
––
|
6.8
|
6.8
|
––
|
5.1
|
5.1
|
Restructuring
costs
|
––
|
––
|
––
|
––
|
2.2
|
2.2
|
Acquisition-related
transaction costs
|
––
|
1.1
|
1.1
|
––
|
––
|
––
|
|
$
|
30.3
|
$
|
7.9
|
$
|
38.2
|
$
|
25.5
|
$
|
7.3
|
$
|
32.8
|
Less: net finance
costs
|
$
|
5.8
|
$
|
––
|
$
|
5.8
|
$
|
5.6
|
$
|
––
|
$
|
5.6
|
Income before
income taxes
|
$
|
24.5
|
$
|
7.9
|
$
|
32.4
|
$
|
19.9
|
$
|
7.3
|
$
|
27.2
|
Provision for income
taxes
|
$
|
6.3
|
$
|
––
|
$
|
6.3
|
$
|
4.9
|
$
|
––
|
$
|
4.9
|
Adjustments to
provision for
|
|
|
|
|
|
|
income
taxes1
|
––
|
2.2
|
2.2
|
––
|
2.0
|
2.0
|
|
$
|
6.3
|
$
|
2.2
|
$
|
8.5
|
$
|
4.9
|
$
|
2.0
|
$
|
6.9
|
Net
income
|
$
|
18.2
|
$
|
5.7
|
$
|
23.9
|
$
|
15.0
|
$
|
5.3
|
$
|
20.3
|
Basic earnings per
share
|
$
|
0.20
|
$
|
0.06
|
$
|
0.26
|
$
|
0.16
|
$
|
0.06
|
$
|
0.22
|
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
|
|
|
|
|
Twelve Months Ended March 31, 2019
|
Twelve Months Ended
March 31, 2018
|
|
IFRS
|
Adjustments
|
Adjusted
|
IFRS
|
Adjustments
|
Adjusted
|
|
|
|
(non-IFRS)
|
|
|
(non-IFRS)
|
Earnings from
operations
|
$
|
114.8
|
$
|
––
|
$
|
114.8
|
$
|
85.5
|
$
|
––
|
$
|
85.5
|
Amortization of
acquisition-
|
|
|
|
|
|
|
related intangible
assets
|
––
|
23.3
|
23.3
|
––
|
20.6
|
20.6
|
Restructuring
costs
|
––
|
––
|
––
|
––
|
11.2
|
11.2
|
Acquisition-related
transactions costs
|
––
|
4.7
|
4.7
|
––
|
––
|
––
|
|
$
|
114.8
|
$
|
28.0
|
$
|
142.8
|
$
|
85.5
|
$
|
31.8
|
$
|
117.3
|
Less: net finance
costs
|
$
|
20.9
|
$
|
––
|
$
|
20.9
|
$
|
23.8
|
$
|
––
|
$
|
23.8
|
Income before
income
taxes
|
$
|
93.9
|
$
|
28.0
|
$
|
121.9
|
$
|
61.7
|
$
|
31.8
|
$
|
93.5
|
Provision for income
taxes
|
$
|
23.1
|
$
|
––
|
$
|
23.1
|
$
|
14.5
|
$
|
––
|
$
|
14.5
|
Adjustments to
provision for
|
|
|
|
|
|
|
income
taxes1
|
––
|
7.5
|
7.5
|
––
|
9.2
|
9.2
|
|
$
|
23.1
|
$
|
7.5
|
$
|
30.6
|
$
|
14.5
|
$
|
9.2
|
$
|
23.7
|
Net
income
|
$
|
70.8
|
$
|
20.5
|
$
|
91.3
|
$
|
47.2
|
$
|
22.6
|
$
|
69.8
|
Basic earnings per
share
|
$
|
0.76
|
$
|
0.22
|
$
|
0.98
|
$
|
0.50
|
$
|
0.24
|
$
|
0.74
|
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.
|
SUMMARY OF INVESTMENTS, LIQUIDITY, CASH FLOW AND FINANCIAL
RESOURCES
Investments
(In millions of
dollars)
|
|
Fiscal
2019
|
Fiscal
2018
|
Investments –
increase (decrease)
|
|
|
|
Non-cash operating
working capital
|
|
$
|
(2.5)
|
$
|
27.0
|
Acquisition of
property, plant and equipment
|
|
21.1
|
19.9
|
Acquisition of
intangible assets
|
|
19.8
|
6.1
|
Proceeds from
disposal of assets
|
|
(5.2)
|
(2.6)
|
Total net
investments
|
|
$
|
33.2
|
$
|
50.4
|
In fiscal 2019, the Company's investment in non-cash working
capital decreased $2.5 million,
compared to an increase of $27.0
million a year ago. Accounts receivable increased 4%, or
$9.2 million, driven by the
acquisition of Comecer. Net contracts in progress decreased 24%, or
$16.6 million, compared to
March 31, 2018. 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 16%, or
$9.5 million, primarily due to the
acquisition of Comecer. Deposits and prepaid assets increased 28%,
or $6.2 million, compared to
March 31, 2018 due to timing of
program execution. Accounts payable and accrued liabilities
increased 6%, or $15.6 million,
compared to March 31, 2018 due to the
acquisition of Comecer. Provisions decreased 34%, or $7.1 million, compared to March 31, 2018.
Capital expenditures totalled $21.1
million for fiscal 2019, primarily related to computer
hardware, building additions, and office equipment. Capital
expenditures totalled $19.9 million
in fiscal 2018, primarily related to computer hardware, and the
improvement and expansion of certain manufacturing
facilities.
Intangible asset expenditures for fiscal 2019 and fiscal 2018
were $19.8 million and $6.1 million, respectively. Fiscal 2019
intangible asset expenditures primarily related to the acquisition
of substantially all of the intellectual property assets of
Transformix Engineering Inc. ("Transformix") for $10.0 million. Transformix's CNCAssembly system,
based on its patented Rapid Speed Matching technology, provides a
method of linking and synchronizing the movements of devices and
tooling to enable faster and more efficient assembly systems. This
enhanced capability is expected to provide higher speed, lower
cost, energy efficient and more flexible assembly solutions for
ATS' customers, while utilizing a smaller footprint. CNCAssembly is
suitable for any application where high precision motion control is
required and can serve a broad range of end markets. The addition
of this important technology will complement ATS' growing portfolio
of linear mover technology products, which includes the
best-in-class SuperTrakTM linear motion system and the
recently launched SuperTrak MicroTM. Amortization of the
intangible asset will begin when the asset is available for use
which is estimated to be in the second half of fiscal 2020. Over
the next five years, potential future payments of up to
$20.0 million are payable based on
sales which incorporate the acquired intellectual property. The
commission expenses will be recognized as they are incurred.
Proceeds from disposal of assets were $5.2 million in fiscal 2019, compared to
$2.6 million in fiscal 2018. The
increase primarily reflected the sale of redundant assets in fiscal
2019.
The Company performs impairment tests on its goodwill and
intangible asset balances on an annual basis or as warranted by
events or circumstances. The Company conducted its annual
impairment assessment in the fourth quarter of fiscal 2019 and
determined there is no impairment of goodwill or intangible assets
as of March 31, 2019 (fiscal 2018 –
$nil).
All the Company's investments involve risks and require that the
Company make judgments and estimates regarding the likelihood of
recovery of the respective costs. In the event management
determines that any of the Company's investments have become
permanently impaired or recovery is no longer reasonably assured,
the value of the investment would be written down to its estimated
net realizable value as a charge against earnings.
Liquidity, Cash Flow and Financial Resources
(In
millions of dollars, except ratios)
As
at
|
|
Fiscal
2019
|
Fiscal
2018
|
Cash and cash
equivalents
|
|
$
|
224.5
|
$
|
330.1
|
Debt-to-equity
ratio
|
|
0.48:1
|
0.47:1
|
Cash flows provided
by operating activities
|
|
$
|
127.6
|
$
|
59.7
|
At March 31, 2019, the Company had
cash and cash equivalents of $224.5
million compared to $330.1
million at March 31,
2018. At March 31, 2019, the
Company's debt-to-total equity ratio was 0.48:1.
In fiscal 2019, cash flows provided by operating activities were
$127.6 million ($59.7 million provided by operating activities in
the corresponding period 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 and higher
net income compared to a year ago.
At March 31, 2019, the Company had
$632.7 million of unutilized
multipurpose credit, including letters of credit, available under
existing credit facilities and an additional $19.2 million available under letter of credit
facilities.
On July 28, 2017, the Company
amended its senior secured credit facility to extend the agreement
by three years to mature on August 29,
2021 (the "Credit Facility"). The Credit Facility provides a
committed revolving credit facility of $750.0 million. The Credit Facility is secured by
the Company's assets, including certain real estate in North America and a pledge of shares of
certain subsidiaries. Certain of the Company's subsidiaries also
provide guarantees under the Credit Facility. At March 31, 2019, the Company had utilized
$134.3 million under the Credit
Facility by way of letters of credit (March
31, 2018 - $108.5
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 net 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 that
ranges from 1.45% to 3.00%, and a fee for usage of non-financial
letters of credit that 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 financial covenants including
a net debt-to-EBITDA test and an interest coverage test. Under the
terms of the Credit Facility, the Company is restricted from
encumbering any assets with certain permitted exceptions. The
Credit Facility also limits advances to subsidiaries and partially
restricts the Company from repurchasing its common shares and
paying dividends. At March 31,
2019, all of the covenants were met.
The Company has additional credit facilities available of
$38.6 million (15.3 million Euros, $10.0
million U.S, 50.0 million Thai
Baht and 1.5 million Czech Koruna). The total amount
outstanding on these facilities at March 31,
2019 was $20.6 million, of
which $2.0 million was classified as
bank indebtedness (March 31, 2018 -
$2.7 million) and $18.6 million was classified as long-term debt
(March 31, 2018 - $0.7 million). The interest rates applicable to
the credit facilities range from 0.60% to 8.25% per annum. A
portion of the long-term debt is secured by certain assets of the
Company.
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.
At March 31, 2019, all of the
covenants were met. 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 seven-year term of the
Senior Notes.
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
|
|
$
|
12.3
|
$
|
124.2
|
One – two
years
|
|
10.2
|
2.4
|
Two – three
years
|
|
8.2
|
1.8
|
Three – four
years
|
|
5.0
|
0.2
|
Four – five
years
|
|
3.2
|
0.2
|
Due in over five
years
|
|
3.9
|
––
|
|
|
$
|
42.9
|
$
|
128.7
|
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 March 31, 2019, the total value of outstanding
letters of credit was approximately $203.3
million (March 31, 2018 -
$137.1 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.
SHARE DATA
During fiscal 2019, 416,842 stock options
were exercised. At May 15, 2019 the
total number of shares outstanding was 91,936,539, and there were
1,497,073 stock options outstanding to acquire common shares of the
Company.
NORMAL COURSE ISSUER BID
On December 3, 2018, the Company announced that the
Toronto Stock Exchange ("TSX") had accepted a notice filed by the
Company of its intention to make a normal course issuer bid
("NCIB"). Under the NCIB, ATS has the ability to purchase for
cancellation up to a maximum of 3,000,000 common shares,
representing approximately 3.2% of the 94,139,097 common shares
that were issued and outstanding as of November 16, 2018. On February 6, 2019, ATS announced the TSX's
approval of its amended notice to increase the maximum number of
shares that may be purchased under the NCIB to 6,366,405 common
shares, representing 10% of the "public float" (as defined by the
TSX and calculated as of November 16,
2018), effective February 11,
2019.
Some purchases under the NCIB may be made pursuant to an
automatic purchase plan between ATS and its broker. This plan
enables the purchase of up to 3,000,000
ATS common shares when ATS would not ordinarily be active in
the market due to internal trading blackout periods, insider
trading rules, or otherwise.
From December 3, 2018 to
March 31, 2019, the Company purchased
2,509,120 common shares for $39.3
million under the NCIB. The weighted average price per share
repurchased was $15.65. ATS security
holders may obtain a copy of the notice, without charge, upon
request from the Secretary of the Company.
RELATED PARTY TRANSACTIONS
The Company has 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 in
fiscal 2019.
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.
$150.0 million into Canadian dollars.
The Company will receive interest of 6.50% U.S. per annum and pay
interest of 6.501% Canadian. The terms of the hedging relationship
will end on June 15, 2023.
The Company manages foreign exchange risk on its Euro
denominated net investments. The Company uses cross-currency swaps
as derivative financial instruments to hedge a portion of the
foreign exchange risk related to its Euro-denominated net
investment. On March 29, 2016, the
Company entered into a cross-currency interest rate swap instrument
to swap 134.1 million Euros into
Canadian dollars. The Company will receive interest of 6.501%
Canadian per annum and pay interest of 5.094% Euros. The terms of
the hedging relationship will end on June
15, 2023.
In addition, from time to time, the Company may hedge the
foreign exchange risk arising from foreign currency debt,
intercompany loans, net investments in foreign-based subsidiaries
and committed acquisitions through the use of forward foreign
exchange contracts or other non-derivative financial instruments.
The Company uses hedging as a risk management tool, not to
speculate.
Period average exchange rates in CDN$
|
Year-end actual
exchange rates
|
Period average
exchange rates
|
|
March 31,
2019
|
March 31,
2018
|
% change
|
March 31,
2019
|
March 31,
2018
|
% change
|
U.S.
dollar
|
1.336
|
1.290
|
3.6%
|
1.313
|
1.284
|
2.2%
|
Euro
|
1.499
|
1.589
|
(5.7%)
|
1.518
|
1.502
|
1.1%
|
CONSOLIDATED QUARTERLY RESULTS
(In millions of
dollars, except per share amounts)
|
|
Q4 2019
|
|
Q3
2019
|
|
Q2
2019
|
|
Q1
2019
|
|
Q4
2018
|
|
Q3
2018
|
|
Q2
2018
|
|
Q1
2018
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenues
|
$
|
348.6
|
$
|
321.4
|
$
|
283.6
|
$
|
300.0
|
$
|
298.4
|
$
|
277.6
|
$
|
274.9
|
$
|
264.0
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings from
operations
|
$
|
30.3
|
$
|
38.5
|
$
|
19.0
|
$
|
27.0
|
$
|
25.5
|
$
|
14.8
|
$
|
23.9
|
$
|
21.3
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted earnings
from
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
operations1
|
$
|
38.2
|
$
|
46.7
|
$
|
25.4
|
$
|
32.6
|
$
|
32.8
|
$
|
29.3
|
$
|
28.8
|
$
|
26.3
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
income
|
$
|
18.2
|
$
|
25.1
|
$
|
10.8
|
$
|
16.7
|
$
|
15.0
|
$
|
6.9
|
$
|
13.8
|
$
|
11.5
|
Basic and diluted
earnings
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
per
share
|
$
|
0.20
|
$
|
0.27
|
$
|
0.11
|
$
|
0.18
|
$
|
0.16
|
$
|
0.07
|
$
|
0.15
|
$
|
0.12
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted basic
earnings per
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
share1
|
$
|
0.26
|
$
|
0.33
|
$
|
0.17
|
$
|
0.22
|
$
|
0.22
|
$
|
0.18
|
$
|
0.18
|
$
|
0.16
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Order
Bookings2
|
$
|
298.0
|
$
|
397.0
|
$
|
355.0
|
$
|
358.0
|
$
|
348.0
|
$
|
311.0
|
$
|
257.0
|
$
|
266.0
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Order
Backlog2
|
$
|
904.0
|
$
|
926.0
|
$
|
830.0
|
$
|
789.0
|
$
|
746.0
|
$
|
689.0
|
$
|
648.0
|
$
|
683.0
|
1
|
See "Notice to
Reader: Non-IFRS Measures and Additional IFRS Measures" and
"Reconciliation of Non-IFRS Measures to IFRS Measures.
|
2
|
Non-IFRS
Measure. See "Notice to Reader: Non-IFRS Measures and
Additional IFRS Measures".
|
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 consolidated financial statements
requires management to make estimates, judgments and assumptions
that affect the reported amounts of assets, liabilities, revenues
and expenses, and the disclosure of contingent assets and
liabilities at the end of the reporting period. Uncertainty about
these estimates, judgments and assumptions could result in outcomes
that require a material adjustment to the carrying amount of the
asset or liability affected in future periods.
The Company based its assumptions on information available when
the consolidated financial statements were prepared. Existing
circumstances and assumptions about future developments may change
due to market changes or circumstances arising beyond the control
of the Company. Such changes are reflected in the estimates
as they occur.
Notes 2 and 3 to the consolidated financial statements describe
the basis of accounting and the Company's significant accounting
policies.
Revenue recognition and contracts in
progress
The nature of ATS contracts requires the use of
estimates to quote new business, and most automation systems are
typically sold on a fixed-price basis. Revenues on construction
contracts and other long-term contracts are recognized on a
percentage of completion basis as outlined in note 3(c) "Revenue
recognition – Construction contracts" to the consolidated financial
statements. In applying the accounting policy on construction
contracts, judgment is required in determining the estimated costs
to complete a contract. These cost estimates are reviewed at each
reporting period and by their nature may give rise to income
volatility. If the actual costs incurred by the Company to complete
a contract are significantly higher than estimated, the Company's
earnings may be negatively affected. The use of estimates involves
risks, since the work to be performed involves varying degrees of
technical uncertainty, including possible development work to meet
the customer's specification, the extent of which is sometimes not
determinable until after the project has been awarded. In the event
the Company is unable to meet the defined performance specification
for a contracted automation system, it may need to redesign and
rebuild all or a portion of the system at its expense without an
increase in the selling price. Certain contracts may have
provisions that reduce the selling price or provide for refund of
purchase price if the Company fails to deliver or complete the
contract by specified dates. These provisions may expose the
Company to liabilities or adversely affect the Company's results of
operations or financial position.
ATS' contracts may be terminated by customers in the event of a
default by the Company or, in some cases, for the convenience of
the customer. In the event of a termination for convenience, the
Company typically negotiates a payment provision reflective of the
progress achieved on the contract and/or the costs incurred to the
termination date. If a contract is cancelled, Order Backlog is
reduced and production utilization may be negatively impacted.
A complete provision, which can be significant, is made for
losses on such contracts when the losses first become known.
Revisions in estimates of costs and profits on contracts, which can
also be significant, are recorded in the accounting period in which
the relevant facts impacting the estimates become known.
A portion of ATS' revenue is recognized when earned, which is
generally at the time of shipment and transfer of title to the
customer, provided collection is reasonably assured.
Income taxes
Deferred income tax assets, disclosed in
note 17 to the consolidated financial statements, are recognized to
the extent that it is probable that taxable income will be
available against which the losses can be utilized.
Significant management judgment is required to determine the amount
of deferred income tax assets that can be recognized based upon the
likely timing and level of future taxable income together with
future tax- planning strategies.
If the assessment of the Company's ability to utilize the
deferred income tax asset changes, the Company would be required to
recognize more or fewer deferred income tax assets, which would
increase or decrease income tax expense in the period in which this
is determined. The Company establishes provisions based on
reasonable estimates for possible consequences of audits by the tax
authorities of the respective countries in which it operates.
The amount of such provisions is based on various factors, such as
experience of previous taxation audits and differing
interpretations of tax regulations by the taxable entity and the
respective tax authority. These provisions for uncertain tax
positions are made using the best estimate of the amount expected
to be paid based on a qualitative assessment of all the relevant
factors. The Company reviews the adequacy of these provisions
at each quarter. However, it is possible that at some future date
an additional liability could result from audits by the taxation
authorities. Where the final tax outcome of these matters is
different from the amount initially recorded, such differences will
affect the tax provisions in the period in which such determination
is made.
Stock-based payment transactions
The Company measures
the cost of transactions with employees by reference to the fair
value of the equity instruments at the date at which they are
granted. Estimating fair value for stock-based payment
transactions requires the determination of the most appropriate
valuation model, which is dependent on the terms and conditions of
the grant. This estimate also requires determination of the
most appropriate inputs to the valuation model, including the
future forfeiture rate, the expected life of the share option,
weighted average risk-free interest rate, volatility and dividend
yield, and formation of assumptions. The assumptions and
models used for estimating fair value for stock-based payment
transactions are disclosed in note 18 to the consolidated financial
statements.
Impairment of non-financial assets
Impairment exists
when the carrying value of an asset or cash-generating unit exceeds
its recoverable amount, which is the higher of its fair value less
costs to sell and its value in use. The calculations involve
significant estimates and assumptions. Items estimated include cash
flows, discount rates and assumptions on revenue growth rates.
These estimates could affect the Company's future results if the
current estimates of future performance and fair values change.
Goodwill is assessed for impairment on an annual basis as described
in note 10 to the consolidated financial statements. The Company
performed its annual impairment test of goodwill as at March 31, 2019 and determined there was no
impairment (March 31, 2018
– $nil).
Provisions
As described in note 3(n) to the
consolidated financial statements, the Company records a provision
when an obligation exists, an outflow of economic resources
required to settle the obligation is probable and a reliable
estimate can be made of the amount of the obligation. The Company
records a provision based on the best estimate of the required
economic outflow to settle the present obligation at the
consolidated statement of financial position date. While management
believes these estimates are reasonable, differences in actual
results or changes in estimates could have a material impact on the
obligations and expenses reported by the Company.
Employee benefits
The cost of defined benefit pension
plans and the present value of the pension obligations are
determined using actuarial valuations. An actuarial valuation
involves making various assumptions that may differ from actual
developments in the future. These include the determination of the
discount rate, future salary increases, mortality rates and future
pension increases. Due to the complexity of the valuation, the
underlying assumptions and its long-term nature, a defined benefit
obligation is highly sensitive to changes in these assumptions. All
assumptions are reviewed at each reporting date.
In determining the appropriate discount rate, management
considers the interest rates of corporate bonds in their respective
currency, with extrapolated maturities corresponding to the
expected duration of the defined benefit obligation. The mortality
rate is based on publicly available mortality tables for the
specific country. Future salary increases and pension increases are
based on expected future inflation rates for the respective
country. Further details about the assumptions used are provided in
note 14 to the consolidated financial statements.
CHANGES IN ACCOUNTING POLICIES
ACCOUNTING STANDARD ADOPTED IN FISCAL 2019
IFRS 15
– Revenue from Contracts with Customers
Effective
April 1, 2018, the Company adopted
IFRS 15 - Revenue from contracts with Customers ("IFRS
15"), which establishes a single comprehensive model for
entities to us in accounting for revenues arising from contracts
with customers. Under IFRS 15, revenues are recognized at an
amount that reflects the consideration to which an entity expects
to be entitled in exchange for transferring goods or services to a
customer. The principles in IFRS 15 provide a more structured
approach to measuring and recognizing revenues.
The Company adopted the standard in accordance with the modified
retrospective transitional approach. There were no transitional
adjustments or changes to the Company's revenue recognition
policies required on the adoption of this standard. The transition
to the new standard required additional disclosures in the
consolidated financial statements. The Company applied
certain practical expedients, as permitted by the standard in
determining the impact on transition.
The standard requires contract assets and contract liabilities
to be separately presented in the statement of financial position.
Contract assets represent the right to consideration in exchange
for goods or services that have been transferred to a customer.
Contract liabilities represent the obligation to transfer goods and
services to a customer for which the Company has received
consideration (or an amount of consideration is due) from the
customer. Previously, the Company recognized contract assets as
"costs and earnings in excess of billings on contracts in progress"
and contract liabilities as "billings in excess of costs and
earnings on contracts in progress." Based on IFRS 15, contract
assets and contract liabilities have been disclosed as current
assets and current liabilities respectively in the statement of
financial position.
ACCOUNTING STANDARDS ISSUED BUT NOT YET
EFFECTIVE
IFRS 16 – Leases
In January 2016, the IASB issued IFRS 16 –
Leases ("IFRS 16"), which requires lessees to recognize
assets and liabilities for most leases. There are minimal changes
to the existing accounting in IAS 17 – Leases from the
perspective of lessors. The new standard is effective for annual
periods beginning on or after January 1,
2019, with early adoption permitted provided IFRS 15 has
been adopted or is adopted at the same date. The Company plans to
adopt IFRS 16 using the modified retrospective approach beginning
on April 1, 2019. The Company
intends to apply the practical expedient exemptions available to
exempt low value and short term lease arrangements. Upon
adoption of IFRS 16, the Company expects to recognize right of use
assets and a corresponding lease liability in the range of
$68 to $73
million on the consolidated statements of financial
position, primarily relating to leased buildings and vehicles.
Depreciation and finance costs are expected to increase by
approximately $13 million and
$6 million respectively, which will
primarily be offset by lower operating lease costs which have been
recognized in cost of revenues and SG&A in the consolidated
statements of income.
ATS continues to assess the impact of the new leasing standard
on the Company's consolidated financial statements and the
conclusions and elections above are subject to change prior to the
implementation of the new standard in April
2019.
CONTROLS AND PROCEDURES
The Chief Executive Officer ("CEO") and the Chief Financial
Officer ("CFO") of the Company are responsible for establishing and
maintaining disclosure controls and procedures and internal
controls over financial reporting for the Company. The control
framework used in the design of disclosure controls and procedures
and internal control over financial reporting is the "Internal
Control - Integrated Framework (2013)" issued by the Committee of
Sponsoring Organizations of the Treadway Commission ("COSO").
Disclosure Controls and Procedures
An evaluation of
the design and operating effectiveness of the Company's disclosure
controls and procedures was conducted as of March 31, 2019 under the supervision of the CEO
and CFO as required by CSA National Instrument 52-109 -
Certification of Disclosure in Issuers' Annual and Interim
Filings. The evaluation included documentation, review,
enquiries and other procedures considered appropriate in the
circumstances. Based on that evaluation, the CEO and the CFO have
concluded that the Company's disclosure controls and procedures are
effective to provide reasonable assurance that information relating
to the Company and its consolidated subsidiaries that is required
to be disclosed in reports filed under provincial and territorial
securities legislation is recorded, processed, summarized and
reported to senior management, including the CEO and the CFO, so
that appropriate decisions can be made by them regarding required
disclosure within the time periods specified in the provincial
and territorial securities legislation.
Internal Control over Financial Reporting
CSA National
Instrument 52-109 requires the CEO and CFO to certify that they are
responsible for establishing and maintaining internal control over
financial reporting for the Company, and that those internal
controls have been designed and are effective in providing
reasonable assurance regarding the reliability of financial
reporting and the preparation of financial statements in accordance
with IFRS.
Management, including the CEO and CFO, does not expect that the
Company's disclosure controls or internal controls over financial
reporting will prevent or detect all errors and all fraud or will
be effective under all potential future conditions. A control
system is subject to inherent limitations and, no matter how well
designed and operated, can provide only reasonable, not absolute,
assurance that the control system's objectives will be met.
The CEO and CFO have, using the framework and criteria
established in "Internal Control – Integrated Framework (2013)"
issued by COSO, evaluated the design and operating effectiveness of
the Company's internal controls over financial reporting and
concluded that, as of March 31, 2019,
internal controls over financial reporting were effective to
provide reasonable assurance that information related to
consolidated results and decisions to be made based on those
results were appropriate.
During the years ended March 31,
2019 and March 31, 2018, 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.
Limitation on Scope
The Company acquired Comecer on
February 28, 2019. Management
has not fully completed its review of internal controls over
financial reporting for this newly acquired organization.
Since the acquisition occurred within the 365 days of the reporting
period, management has limited the scope of design and subsequent
evaluation of disclosure controls and procedures and internal
controls over financial reporting, as permitted under 5.3 of Form
52-109 F1 pursuant to National Instrument 52-109, Certification of
Disclosure in Issuer's Annual and Interim Filings. For the
period covered by this MD&A, management has undertaken
additional procedures to satisfy itself with respect to the
accuracy and completeness of the acquired operations' financial
information. The following summary of financial information
pertains to the acquisition that was included in ATS' consolidated
financial statements for the year ended March 31, 2019.
(millions of
dollars)
|
Comecer
|
Revenue1
|
8.7
|
Net
income1
|
0.1
|
Current
assets2
|
59.8
|
Non-current
assets2
|
174.2
|
Current
liabilities2
|
64.1
|
Non-current
liabilities2
|
82.9
|
1
|
Results from March 1,
2019 to March 31,
2019
|
2
|
Balance sheet as at
March 31, 2019
|
OTHER MAJOR CONSIDERATIONS AND RISK FACTORS
Any
investment in ATS will be subject to risks inherent to ATS'
business. The following risk factors are discussed in the Company's
Annual Information Form, which may be found on SEDAR at
www.sedar.com.
- Market volatility;
- Strategy execution risks;
- Acquisition risks;
- Expansion risks;
- Industry consolidation;
- Liquidity, access to capital markets and leverage;
- Restrictive covenants;
- Availability of performance and other guarantees from financial
institutions;
- Share price volatility;
- Competition;
- First-time program and production risks;
- Automation systems pricing;
- Revenue mix risk;
- Pricing, quality, delivery and volume risks;
- Product failure;
- New product market acceptance, obsolescence, and
commercialization;
- Security breaches or disruptions of information technology
systems;
- Insurance coverage;
- Availability of raw materials and other manufacturing
inputs;
- Customer risks;
- Insolvency or financial distress of third parties;
- Availability of human resources and dependence on key
personnel;
- Cumulative loss of several significant contracts;
- Lengthy sales cycle;
- Lack of long-term customer commitment;
- Foreign exchange risk;
- Doing business in foreign countries;
- Legislative compliance;
- Environmental compliance;
- Corruption of Foreign Public Officials Act, United States
Foreign Corrupt Practices Act and anti-bribery laws risk;
- Intellectual property protection risks;
- Infringement of third parties' intellectual property rights
risk;
- Internal controls;
- Impairment of intangible assets risk;
- Income and other taxes and uncertain tax liabilities;
- Variations in quarterly results;
- Litigation;
- Natural disasters, pandemics, acts of war, terrorism,
international conflicts or other disruptions;
- Manufacturing facilities disruption;
- Restructuring and work stoppage risk; and
- Dependence on performance of subsidiaries.
Note to Readers: Forward-looking statements
This news
release and management's discussion and analysis of financial
conditions, and results of operations of ATS contains certain
statements that may constitute forward-looking information within
the meaning of applicable securities laws ("forward-looking
statements"). Such forward-looking statements involve known
and unknown risks, uncertainties and other factors that may cause
the actual results, performance or achievements of ATS, or
developments in ATS' business or in its industry, to differ
materially from the anticipated results, performance, achievements
or developments expressed or implied by such forward-looking
statements. Forward-looking statements include all disclosure
regarding possible events, conditions or results of operations that
is based on assumptions about future economic conditions and
courses of action. Forward-looking statements may also
include, without limitation, any statement relating to future
events, conditions or circumstances. ATS cautions you not to place
undue reliance upon any such forward-looking statements, which
speak only as of the date they are made. Forward-looking
statements relate to, among other things: the strategic framework;
trade negotiations and disputes; 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; the Company's Order Backlog partially mitigating the
impact of volatile Order Bookings; rate of Order Backlog
conversion; expected benefits with respect to the Company's efforts
to expand its services revenues; deployment of the ATS Business
Model ("ABM") and the expected impact; initiatives having the goal
of expanding adjusted earnings from operations margin over
long-term; the Company's strategy to expand organically and through
acquisition; the Company's goal with respect to non-cash working
capital as a percentage of revenues; the Company's expectations in
regards to investment in capital assets; expectation in relation to
meeting funding requirements for investments; potential to use
leverage to support growth strategy; the expected benefits
resulting from the acquisition and integration of Comecer; the
Company's expectation with respect to effective tax rate; expected
benefits from the purchase of Transformix intellectual property
assets and when the asset will be available for use; and the
Company's belief with respect to the outcome of certain lawsuits,
claims and contingencies.
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 current or future trade
negotiations or disputes have unexpected impact on the business,
including increased cost of supplies; 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; variations in the amount of
Order Backlog completed in any given quarter; that the Company is
not successful in growing its service offering or that expected
benefits are not realized; that the ABM is not deployed
effectively, not adopted on the desired scale by the business, or
that its impact is other than as expected; that efforts to expand
adjusted earnings from operations margin over long-term is
unsuccessful, due to any number of reasons, including less than
anticipated increase in after-sales service revenues or reduced
margins attached to those revenues, inability to achieve lower
costs through supply chain management, failure to develop, adopt
internally, or have customers adopt, standardized platforms and
technologies, inability to maintain current cost structure if
revenues were to grow, and failure of ABM to impact margins;
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; non-cash working capital as a
percentage of revenues operating at a level other than as expected
due to reasons, including, the timing and nature of Order Bookings,
the timing of payment milestones and payment terms in customer
contracts, and delays in customer programs; that the Company
reverses one or more of its plans in regards to investment in
capital assets or that the cost of capital assets are greater than
expected; that the expected benefits from the acquisition of
Comecer are not realized for reasons including failure to
successfully integrate it and lack of customer receptivity to the
expanded offering; that the effective tax rate is other than
expected, due to reasons including income spread among
jurisdictions being other than anticipated; that ATS does not
realize the expected benefits of the Transformix asset purchase or
that the products incorporating the technology are delayed in
development; 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 and/or
professional liability claims; risks associated with greater than
anticipated tax liabilities or expenses; and other risks detailed
from time to time in ATS' filings with Canadian provincial
securities regulators. Forward-looking statements are based on
management's current plans, estimates, projections, beliefs and
opinions, and other than as required by applicable securities laws,
ATS does not undertake any obligation to update forward-looking
statements should assumptions related to these plans, estimates,
projections, beliefs and opinions change.
ATS AUTOMATION
TOOLING SYSTEMS INC. Consolidated Statements of Financial
Position (in thousands of Canadian dollars)
|
As
at
|
Note
|
|
March
31 2019
|
|
March 31
2018
|
|
|
|
|
|
|
ASSETS
|
15
|
|
|
|
|
Current
assets
|
|
|
|
|
|
Cash and cash
equivalents
|
|
$
|
224,540
|
$
|
330,148
|
Accounts
receivable
|
|
|
217,245
|
|
209,551
|
Income tax
receivable
|
|
|
4,938
|
|
3,455
|
Contract
assets
|
3, 21
|
|
213,553
|
|
164,917
|
Inventories
|
6
|
|
67,998
|
|
58,509
|
Deposits, prepaids
and other assets
|
7
|
|
28,719
|
|
22,510
|
|
|
|
756,993
|
|
789,090
|
Non-current
assets
|
|
|
|
|
|
Property, plant and
equipment
|
9
|
|
97,669
|
|
85,102
|
Other
assets
|
8
|
|
2,446
|
|
––
|
Goodwill
|
10
|
|
551,643
|
|
459,159
|
Intangible
assets
|
11
|
|
213,945
|
|
148,869
|
Deferred income tax
assets
|
17
|
|
3,194
|
|
2,987
|
Investment tax credit
receivable
|
17
|
|
62,953
|
|
57,012
|
|
|
|
931,850
|
|
753,129
|
Total
assets
|
|
$
|
1,688,843
|
$
|
1,542,219
|
|
|
|
|
|
|
LIABILITIES AND
EQUITY
|
|
|
|
|
|
Current
liabilities
|
|
|
|
|
|
Bank
indebtedness
|
15
|
$
|
1,950
|
$
|
2,668
|
Accounts payable and
accrued
liabilities
|
|
|
254,227
|
|
240,093
|
Income tax
payable
|
|
|
7,721
|
|
6,291
|
Provisions
|
13
|
|
13,943
|
|
20,994
|
Contract
liabilities
|
3, 21
|
|
161,139
|
|
95,912
|
Current portion of
long-term debt
|
15
|
|
18,550
|
|
393
|
|
|
|
457,530
|
|
366,351
|
Non-current
liabilities
|
|
|
|
|
|
Employee
benefits
|
14
|
|
28,187
|
|
28,151
|
Long-term
debt
|
15
|
|
328,247
|
|
315,129
|
Deferred income tax
liabilities
|
17
|
|
78,585
|
|
42,907
|
Other long-term
liabilities
|
8
|
|
6,663
|
|
30,908
|
|
|
|
441,682
|
|
417,095
|
Total
liabilities
|
|
$
|
899,212
|
$
|
783,446
|
Commitments and
contingencies
|
15, 19
|
|
|
|
|
EQUITY
|
|
|
|
|
|
Share
capital
|
16
|
$
|
516,613
|
$
|
548,747
|
Contributed
surplus
|
|
|
11,709
|
|
12,535
|
Accumulated other
comprehensive income
|
|
|
69,549
|
|
75,830
|
Retained
earnings
|
|
|
191,449
|
|
121,369
|
Equity attributable
to shareholders
|
|
|
789,320
|
|
758,481
|
Non-controlling
interests
|
|
|
311
|
|
292
|
Total
equity
|
|
|
789,631
|
|
758,773
|
Total liabilities
and equity
|
|
$
|
1,688,843
|
$
|
1,542,219
|
ATS AUTOMATION
TOOLING SYSTEMS INC. Consolidated Statements of
Income (in thousands of Canadian dollars, except per share
amounts)
|
|
|
|
|
|
|
Years ended March
31
|
Note
|
|
2019
|
|
2018
|
|
|
|
|
|
|
Revenues
|
|
|
|
|
|
Revenues from
construction contracts
|
|
$
|
763,228
|
$
|
654,193
|
Sale of
goods
|
|
|
90,005
|
|
79,979
|
Services
rendered
|
|
|
400,383
|
|
380,758
|
|
|
|
|
|
|
Total
revenues
|
20, 21
|
|
1,253,616
|
|
1,114,930
|
|
|
|
|
|
|
Operating costs and
expenses
|
|
|
|
|
|
Cost of
revenues
|
|
|
924,898
|
|
826,771
|
Selling, general and
administrative
|
|
|
204,073
|
|
194,421
|
Stock-based
compensation
|
18
|
|
9,850
|
|
8,276
|
|
|
|
|
|
|
Earnings from
operations
|
|
|
114,795
|
|
85,462
|
|
|
|
|
|
|
Net finance
costs
|
22
|
|
20,909
|
|
23,766
|
|
|
|
|
|
|
Income before
income taxes
|
|
|
93,886
|
|
61,696
|
|
|
|
|
|
|
Income tax
expense
|
17
|
|
23,124
|
|
14,487
|
|
|
|
|
|
|
Net
income
|
|
$
|
70,762
|
$
|
47,209
|
|
|
|
|
|
|
Attributable
to
|
|
|
|
|
|
Shareholders
|
|
$
|
70,743
|
$
|
47,165
|
Non-controlling
interests
|
|
|
19
|
|
44
|
|
|
$
|
70,762
|
$
|
47,209
|
|
|
|
|
|
|
Earnings per share
attributable to shareholders
|
|
|
|
|
|
Basic
|
23
|
$
|
0.76
|
$
|
0.50
|
Diluted
|
23
|
$
|
0.75
|
$
|
0.50
|
ATS AUTOMATION
TOOLING SYSTEMS INC. Consolidated Statements of
Comprehensive Income (in thousands of Canadian
dollars)
|
|
|
|
|
|
|
Years ended March
31
|
Note
|
|
2019
|
|
2018
|
|
|
|
|
|
|
Net
income
|
|
$
|
70,762
|
$
|
47,209
|
|
|
|
|
|
|
Other comprehensive
income (loss):
|
|
|
|
|
|
|
|
|
|
|
|
Items to be
reclassified subsequently to net income:
|
|
|
|
|
|
|
|
|
|
|
|
Currency translation
adjustment (net of income taxes of $nil)
|
|
|
(12,145)
|
|
24,414
|
|
|
|
|
|
|
Net unrealized gain
(loss) on derivative financial instruments
|
|
|
|
|
|
designated as cash
flow hedges
|
12
|
|
(109)
|
|
2,357
|
Tax
impact
|
|
|
23
|
|
(655)
|
|
|
|
|
|
|
Loss (gain)
transferred to net income for derivatives
|
|
|
|
|
|
designated as cash
flow hedges
|
12
|
|
90
|
|
(1,673)
|
Tax
impact
|
|
|
(12)
|
|
479
|
|
|
|
|
|
|
Cash flow hedge
reserve adjustment
|
12
|
|
7,826
|
|
(5,420)
|
Tax
impact
|
|
|
(1,954)
|
|
1,354
|
|
|
|
|
|
|
Items that will not
be reclassified subsequently to net income:
|
|
|
|
|
|
|
|
|
|
|
|
Actuarial losses on
defined benefit pension plans
|
14
|
|
(675)
|
|
(534)
|
Tax
impact
|
|
|
12
|
|
139
|
|
|
|
|
|
|
Other
comprehensive income (loss)
|
|
|
(6,944)
|
|
20,461
|
|
|
|
|
|
|
Comprehensive
income
|
|
$
|
63,818
|
$
|
67,670
|
|
|
|
|
|
|
Attributable
to
|
|
|
|
|
|
Shareholders
|
|
$
|
63,799
|
$
|
67,626
|
Non-controlling
interests
|
|
|
19
|
|
44
|
|
|
$
|
63,818
|
$
|
67,670
|
ATS AUTOMATION
TOOLING SYSTEMS INC. Consolidated Statements of Changes
in Equity (in thousands of Canadian dollars)
|
|
|
|
|
|
|
|
|
|
Year ended March
31, 2019
|
|
|
|
|
|
|
|
|
|
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, 2018
|
$
|
548,747
|
$
|
12,535
|
$
|
121,369
|
$
|
79,918
|
$
|
(4,088)
|
$
|
75,830
|
$
|
292
|
$
|
758,773
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
income
|
|
––
|
|
––
|
|
70,743
|
|
––
|
|
––
|
|
––
|
|
19
|
|
70,762
|
Other comprehensive
income (loss)
|
|
––
|
|
––
|
|
(663)
|
|
(12,145)
|
|
5,864
|
|
(6,281)
|
|
––
|
|
(6,944)
|
Total comprehensive
income (loss)
|
|
––
|
|
––
|
|
70,080
|
|
(12,145)
|
|
5,864
|
|
(6,281)
|
|
19
|
|
63,818
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stock-based
compensation
|
|
––
|
|
910
|
|
––
|
|
––
|
|
––
|
|
––
|
|
––
|
|
910
|
Exercise of stock
options
|
|
7,145
|
|
(1,736)
|
|
––
|
|
––
|
|
––
|
|
––
|
|
––
|
|
5,409
|
Repurchase of common
shares (note 16)
|
|
(39,279)
|
|
––
|
|
––
|
|
––
|
|
––
|
|
––
|
|
––
|
|
(39,279)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance, as at
March 31, 2019
|
$
|
516,613
|
$
|
11,709
|
$
|
191,449
|
$
|
67,773
|
$
|
1,776
|
$
|
69,549
|
$
|
311
|
$
|
789,631
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year ended March 31,
2018
|
|
|
|
|
|
|
|
|
|
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
|
|
––
|
|
––
|
|
47,165
|
|
––
|
|
––
|
|
––
|
|
44
|
|
47,209
|
Other comprehensive
income (loss)
|
|
––
|
|
––
|
|
(395)
|
|
24,414
|
|
(3,558)
|
|
20,856
|
|
––
|
|
20,461
|
Total comprehensive
income (loss)
|
|
––
|
|
––
|
|
46,770
|
|
24,414
|
|
(3,558)
|
|
20,856
|
|
44
|
|
67,670
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stock-based
compensation
|
|
––
|
|
953
|
|
––
|
|
––
|
|
––
|
|
––
|
|
––
|
|
953
|
Exercise of stock
options
|
|
5,430
|
|
(1,289)
|
|
––
|
|
––
|
|
––
|
|
––
|
|
––
|
|
4,141
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance, as at March
31, 2018
|
$
|
548,747
|
$
|
12,535
|
$
|
121,369
|
$
|
79,918
|
$
|
(4,088)
|
$
|
75,830
|
$
|
292
|
$
|
758,773
|
ATS AUTOMATION
TOOLING SYSTEMS INC. Consolidated Statements of Cash
Flows (in thousands of Canadian dollars)
|
|
|
|
|
|
|
Years ended March
31
|
Note
|
|
2019
|
|
2018
|
|
|
|
|
|
|
Operating
activities
|
|
|
|
|
|
Net income
|
|
$
|
70,762
|
$
|
47,209
|
Items not involving
cash
|
|
|
|
|
|
Depreciation of
property, plant and
equipment
|
9
|
|
12,137
|
|
10,352
|
Amortization of
intangible
assets
|
11
|
|
30,254
|
|
26,315
|
Deferred income
taxes
|
17
|
|
13,718
|
|
866
|
Other items not
involving
cash
|
|
|
(11,587)
|
|
(6,371)
|
Stock-based
compensation
|
18
|
|
9,850
|
|
8,276
|
|
|
|
125,134
|
|
86,647
|
Change in non-cash
operating working
capital
|
|
|
2,464
|
|
(26,961)
|
Cash flows
provided by operating
activities
|
|
$
|
127,598
|
$
|
59,686
|
|
|
|
|
|
|
Investing
activities
|
|
|
|
|
|
Acquisition of
property, plant and
equipment
|
9
|
$
|
(21,096)
|
$
|
(19,851)
|
Acquisition of
intangible
assets
|
11
|
|
(19,824)
|
|
(6,124)
|
Business acquisition,
net of cash
acquired
|
5
|
|
(156,351)
|
|
––
|
Proceeds from
disposal of property, plant and
equipment
|
|
|
5,209
|
|
2,594
|
Cash flows used in
investing
activities
|
|
$
|
(192,062)
|
$
|
(23,381)
|
|
|
|
|
|
|
Financing
activities
|
|
|
|
|
|
Bank
indebtedness
|
|
$
|
(2,512)
|
$
|
1,191
|
Repayment of
long-term debt
|
|
|
(5,175)
|
|
(2,194)
|
Proceeds from
long-term
debt
|
|
|
335
|
|
195
|
Proceeds from
exercise of stock
options
|
|
|
5,409
|
|
4,141
|
Repurchase of common
shares
|
16
|
|
(39,279)
|
|
––
|
Cash flows
provided by (used in) financing
activities
|
|
$
|
(41,222)
|
$
|
3,333
|
|
|
|
|
|
|
Effect of exchange
rate changes on cash and cash
equivalents
|
|
|
78
|
|
3,813
|
|
|
|
|
|
|
Increase (decrease)
in cash and cash
equivalents
|
|
|
(105,608)
|
|
43,451
|
|
|
|
|
|
|
Cash and cash
equivalents, beginning of
year
|
|
|
330,148
|
|
286,697
|
|
|
|
|
|
|
Cash and cash
equivalents, end of
year
|
|
$
|
224,540
|
$
|
330,148
|
|
|
|
|
|
|
Supplemental
information
|
|
|
|
|
|
Cash income taxes
paid
|
|
$
|
10,468
|
$
|
10,231
|
Cash interest
paid
|
|
$
|
26,243
|
$
|
21,751
|
SOURCE ATS Automation Tooling Systems Inc.