CAMBRIDGE, ON, Aug. 14, 2019 /CNW/ - ATS Automation Tooling
Systems Inc. (TSX: ATA) ("ATS" or the "Company") today
reported financial results for the three months ended June 30, 2019.
First quarter highlights:
- Revenues increased 13% to $339.2
million. Organic growth in revenues was 4% with 9% coming
from acquired businesses KMW and Comecer.
- Earnings from operations were $28.6
million (8% operating margin), compared to $27.0 million (9% operating margin) a year
ago.
- Adjusted earnings from operations1 were $38.0 million (11% margin), compared to
$32.6 million (11% margin) a year
ago.
- EBITDA1 was $47.2
million (14% EBITDA margin), compared to $36.8 million (12% EBITDA margin) a year
ago.
- Earnings per share were 18 cents
basic and diluted compared to 18
cents a year ago. Adjusted basic earnings per
share1 were 25 cents
compared to 22 cents a year ago.
- Order Bookings were a record $423
million, 18% higher than a year ago. Organic growth in Order
Bookings was 9% with an additional 9% increase coming from acquired
businesses.
- Order Backlog increased 24% to $982
million at June 30, 2019
compared to $789 million a year
ago.
"We had a good start to the year, with record Order Bookings,
solid growth in revenues and continued margin expansion," said
Andrew Hider, Chief Executive
Officer. "Operationally, we are focused on driving continuous
improvement through our ABM. Going forward, we have record Order
Backlog, which will support growth, and a strong balance sheet,
which will allow us to continue pursuing our goal of creating
long-term shareholder value."
Financial results
(In millions of dollars unless
otherwise stated)
|
3 months
ended
June
30, 2019
|
3 months
ended
July 1, 2018
|
Revenues
|
$
|
339.2
|
$
|
300.0
|
Earnings from
operations
|
$
|
28.6
|
$
|
27.0
|
Adjusted earnings
from operations1
|
$
|
38.0
|
$
|
32.6
|
EBITDA1
|
$
|
47.2
|
$
|
36.8
|
Net
income
|
$
|
16.4
|
$
|
16.7
|
Adjusted basic
earnings per share1
|
$
|
0.25
|
$
|
0.22
|
Basic and diluted
earnings per share
|
$
|
0.18
|
$
|
0.18
|
1 Non-IFRS
measure: see "Notice to Reader: Non-IFRS Measures and Additional
IFRS Measures".
|
First quarter summary
Fiscal 2020 first quarter
revenues were 13% higher than in the corresponding period a year
ago and included $27.2 million of
revenues earned by KMW and Comecer. Excluding KMW and Comecer,
first quarter revenues were $312.0
million, a 4% increase compared to the corresponding period
a year ago, primarily reflecting Order Backlog, which, excluding
the impact of acquired Order Backlog, was 13% higher entering the
first quarter of fiscal 2020 compared to a year ago. Revenues
generated from services and construction contracts increased 17%
and 6% respectively compared to the corresponding period a year
ago.
By market, revenues generated in life sciences increased by 38%
due to higher Order Backlog entering the first quarter of fiscal
2020, and revenues generated by Comecer. Revenues in the
transportation market increased 20%, due to higher Order Backlog
entering the first quarter of fiscal 2020, and revenues generated
by KMW. Revenues from consumer products and energy markets
decreased 19% and 27% respectively due to lower Order Backlog
entering the first quarter of fiscal 2020.
Fiscal 2020 first quarter earnings from operations were
$28.6 million (8% operating margin)
compared to $27.0 million (9%
operating margin) in the first quarter of fiscal 2019. First
quarter fiscal 2020 earnings from operations included $9.4 million related to amortization of
identifiable intangible assets recorded on business acquisitions,
up from $5.6 million in the
comparable period a year ago. The adoption of IFRS 16 effective
April 1, 2019, impacted earnings
positively by $0.9 million due to the
implied finance costs recorded on lease obligations.
Excluding amortization of identifiable intangible assets
recorded on business acquisitions in both quarters, first
quarter fiscal 2020 adjusted earnings from operations were
$38.0 million (11% margin), compared
to adjusted earnings from operations of $32.6 million (11% margin) a year ago. First
quarter fiscal 2020 adjusted earnings from operations reflected
higher revenues and improved gross margin, partially offset by
higher selling, general and administrative expenses.
Depreciation and amortization expense was $18.6 million in the first quarter of fiscal
2020, compared to $9.8 million a year
ago. The increase primarily reflected incremental amortization of
acquisition-related intangible assets due to the acquisitions of
KMW and Comecer and incremental depreciation of right-of-use assets
as a result of the adoption of IFRS 16.
EBITDA was $47.2 million (14%
EBITDA margin) in the first quarter of fiscal 2020 compared to
$36.8 million (12% EBITDA margin) in
the first quarter of fiscal 2019. EBITDA growth reflected higher
revenues, improved gross margin, and lower operating lease costs
related to the adoption of IFRS 16, partially offset by higher
selling, general and administrative expenses compared to a year
ago.
Impact of Adoption of IFRS 16 - Leases
The nature of
expenses related to identified lease arrangements changed as IFRS
16 replaced straight-line operating lease expense, with
depreciation and interest expense relating to lease liabilities. In
the first quarter of fiscal 2020, the adoption of IFRS 16 resulted
in increased depreciation expenses related to right- of-use
assets of $3.7 million with a
corresponding decrease in operating lease costs which were
recognized in cost of revenues and selling, general and
administrative expenses. In addition, the adoption of IFRS 16
resulted in incremental interest expenses of $0.9 million with corresponding decreases in
operating lease costs. The combined impact of these changes was to
increase earnings from operations by $0.9
million and increase EBITDA by $4.6
million. The impact on net income was negligible. See
"Accounting Standards Adopted in the First Quarter of Fiscal
2020."
Order Backlog Continuity
(In millions of dollars)
|
|
Three
Months
|
|
Three
Months
|
|
|
Ended
|
|
Ended
|
|
|
June
30, 2019
|
|
July 1,
2018
|
Opening Order
Backlog
|
|
$
|
904
|
|
$
|
746
|
Revenues
|
|
(339)
|
|
(300)
|
Order
Bookings
|
|
423
|
|
358
|
Order Backlog
adjustments1
|
|
(6)
|
|
(15)
|
Total
|
|
$
|
982
|
|
$
|
789
|
1 Order Backlog adjustments include
foreign exchange adjustments and cancellations
|
|
|
|
|
Order Bookings
First quarter fiscal 2020 Order
Bookings were $423 million, 18%
higher than first quarter fiscal 2019 Order Bookings. Organic
growth in Order Bookings was 9% compared to the prior year, and
contributions from acquired businesses KMW and Comecer accounted
for 9% of the growth. By market, higher Order Bookings in the life
sciences market primarily related to medical device programs, and
Order Bookings contributed by Comecer. Higher Order Bookings from
the transportation market primarily reflected several large
programs in both North America and
Europe. Order Bookings in the
consumer products market were flat. Bookings in energy markets
decreased due to the timing of customer decisions on various larger
opportunities.
Order Backlog
At June 30,
2019, Order Backlog was $982
million, 24% higher than at July 1,
2018. Order Backlog growth was primarily driven by higher
Order Bookings in the life sciences and transportation markets, and
Order Backlog from acquired businesses.
Quarterly Conference Call
ATS' quarterly conference
call begins at 10:00 a.m. eastern on
Wednesday August 14, 2019, and can be
accessed live at www.atsautomation.com or on the phone by dialing
(647) 427-7450 five minutes prior. A replay of the conference will
be available on the ATS website following the call. Alternatively,
a telephone recording of the call will be available for one week
(until midnight August 21, 2019) by
dialing (416) 849-0833 and entering passcode 7093408 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 Quarter
Ended June 30, 2019
This Management's Discussion and Analysis ("MD&A") for
the three months ended June 30, 2019
(first quarter of fiscal 2020) is as of August 13, 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 unaudited
interim condensed consolidated financial statements of the Company
for the first quarter of fiscal 2020, which have been prepared in
accordance with International Financial Reporting Standards
("IFRS") and are reported in Canadian dollars. The Company assumes
that the reader of this MD&A has access to, and has read, the
audited consolidated financial statements prepared in accordance
with IFRS and the MD&A of the Company for the year ended
March 31, 2019 (fiscal 2019), and,
accordingly, the purpose of this document is to provide a fiscal
2020 first quarter update to the information contained in the
fiscal 2019 MD&A. Additional information is contained in the
Company's filings with Canadian securities regulators, including
its Annual Information Form, found on SEDAR at www.sedar.com and on
the Company's website at www.atsautomation.com.
Notice to reader: Non-IFRS measures and additional IFRS
measures
Throughout this document, management uses certain
non-IFRS measures to evaluate the performance of the Company. 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-month periods ended June 30,
2019 and July
1, 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-month periods ending June 30,
2019 and July 1, 2018 is also
contained in this 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 has
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 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, talent management and
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,
expanding service offerings, investing in innovation and product
development, and strategic and disciplined acquisitions that
strengthen ATS.
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 performance 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.
OVERVIEW – OPERATING RESULTS
Consolidated
Revenues
(In millions of dollars)
|
|
|
|
|
|
|
|
Three
Months
|
|
Three
Months
|
|
|
|
|
|
|
|
|
Ended
|
|
Ended
|
Revenues by
market
|
|
|
|
|
|
|
|
June 30,
2019
|
|
July 1,
2018
|
Life
sciences
|
|
|
|
|
|
|
|
$
|
171.7
|
|
$
|
124.5
|
Transportation
|
|
|
|
|
|
|
|
|
86.9
|
|
|
72.3
|
Consumer
products
|
|
|
|
|
|
|
|
|
53.8
|
|
|
66.3
|
Energy
|
|
|
|
|
|
|
|
|
26.8
|
|
|
36.9
|
Total
revenues
|
|
|
|
|
|
|
|
$
|
339.2
|
|
$
|
300.0
|
Fiscal 2020 first quarter revenues were 13% higher than in the
corresponding period a year ago and included $27.2 million of revenues earned by KMW and
Comecer. Excluding KMW and Comecer, first quarter revenues were
$312.0 million, a 4% increase
compared to the corresponding period a year ago, primarily
reflecting Order Backlog, which, excluding the impact of acquired
Order Backlog, was 13% higher entering the first quarter of fiscal
2020 compared to a year ago. Revenues generated from services and
construction contracts increased 17% and 6% respectively compared
to the corresponding period a year ago.
By market, revenues generated in life sciences increased by 38%
due to higher Order Backlog entering the first quarter of fiscal
2020, and revenues generated by Comecer. Revenues in the
transportation market increased 20%, due to higher Order Backlog
entering the first quarter of fiscal 2020, and revenues generated
by KMW. Revenues from consumer products and energy markets
decreased 19% and 27% respectively due to lower Order Backlog
entering the first quarter of fiscal 2020.
Consolidated Operating Results
(In millions of
dollars)
|
|
Three
Months
|
|
Three
Months
|
|
|
Ended
|
|
Ended
|
|
|
June 30,
2019
|
|
July 1,
2018
|
Earnings from
operations
|
$
|
28.6
|
$
|
27.0
|
Amortization of
acquisition-related intangible
assets
|
|
9.4
|
|
5.6
|
Adjusted earnings
from operations1
|
$
|
38.0
|
$
|
32.6
|
1 See
"Notice to reader: Non-IFRS measures and additional IFRS
measures."
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three
Months
|
|
Three
Months
|
|
|
Ended
|
|
Ended
|
|
|
June 30,
2019
|
|
July 1,
2018
|
Earnings from
operations
|
$
|
28.6
|
$
|
27.0
|
Depreciation and
amortization
|
|
18.6
|
|
9.8
|
EBITDA2
|
$
|
47.2
|
$
|
36.8
|
2 See
"Notice to reader: Non-IFRS measures and additional IFRS
measures."
|
|
|
|
|
Fiscal 2020 first quarter earnings from operations were
$28.6 million (8% operating margin)
compared to $27.0 million (9%
operating margin) in the first quarter of fiscal 2019. First
quarter fiscal 2020 earnings from operations included $9.4 million related to amortization of
identifiable intangible assets recorded on business acquisitions,
up from $5.6 million in the
comparable period a year ago. The adoption of IFRS 16, effective
April 1, 2019, impacted earnings
positively by $0.9 million due to the
implied finance costs recorded on lease obligations.
Excluding amortization of identifiable intangible assets
recorded on business acquisitions in both quarters, first
quarter fiscal 2020 adjusted earnings from operations were
$38.0 million (11% margin), compared
to adjusted earnings from operations of $32.6 million (11% margin) a year ago. First
quarter fiscal 2020 adjusted earnings from operations reflected
higher revenues and improved gross margin, partially offset by
higher selling, general and administrative expenses.
Depreciation and amortization expense was $18.6 million in the first quarter of fiscal
2020, compared to $9.8 million a year
ago. The increase primarily reflected incremental amortization of
acquisition-related intangible assets due to the acquisitions of
KMW and Comecer and incremental depreciation of right-of-use assets
as a result of the adoption of IFRS 16.
EBITDA was $47.2 million (14%
EBITDA margin) in the first quarter of fiscal 2020 compared to
$36.8 million (12% EBITDA margin) in
the first quarter of fiscal 2019. EBITDA growth reflected higher
revenues, improved gross margin, and lower operating lease costs
related to the adoption of IFRS 16, partially offset by higher
selling, general and administrative expenses compared to a year
ago.
Impact of Adoption of IFRS 16 - Leases
The nature of
expenses related to identified lease arrangements changed as IFRS
16 replaced straight-line operating lease expense, with
depreciation and interest expense relating to lease liabilities. In
the first quarter of fiscal 2020, the adoption of IFRS 16 resulted
in increased depreciation expenses related
to right-of-use assets of $3.7 million with a corresponding decrease in
operating lease costs which were recognized in cost of revenues and
selling, general and administrative expenses. In addition, the
adoption of IFRS 16 resulted in incremental interest expenses of
$0.9 million with corresponding
decreases in operating lease costs. The combined impact of these
changes was to increase earnings from operations by $0.9 million and increase EBITDA by $4.6 million. The impact on net income was
negligible. See "Accounting Standards Adopted in the First
Quarter of Fiscal 2020."
Order Bookings by Quarter
First quarter fiscal 2020
Order Bookings were $423 million, 18%
higher than first quarter fiscal 2019 Order Bookings. Organic
growth in Order Bookings was 9% compared to the prior year, and
contributions from acquired businesses KMW and Comecer accounted
for 9% of the growth. By market, higher Order Bookings in the life
sciences market primarily related to medical device programs, and
Order Bookings contributed by Comecer. Higher Order Bookings from
the transportation market primarily reflected several large
programs in both North America and
Europe. Order Bookings in the
consumer products market were flat. Bookings in energy markets
decreased due to the timing of customer decisions on various larger
opportunities.
Order Backlog Continuity
(In millions of dollars)
|
|
Three
Months
|
|
Three
Months
|
|
|
Ended
|
|
Ended
|
|
|
June 30,
2019
|
|
July 1,
2018
|
Opening Order
Backlog
|
$
|
904
|
$
|
746
|
Revenues
|
|
(339)
|
|
(300)
|
Order
Bookings
|
|
423
|
|
358
|
Order Backlog
adjustments1
|
|
(6)
|
|
(15)
|
Total
|
$
|
982
|
$
|
789
|
1 Order Backlog adjustments include
foreign exchange adjustments and cancellations.
|
Order Backlog by Market
(In millions of dollars)
As
at
|
|
June 30,
2019
|
|
July 1,
2018
|
Life
sciences
|
$
|
549
|
$
|
389
|
Transportation
|
|
275
|
|
185
|
Consumer
products
|
|
78
|
|
93
|
Energy
|
|
80
|
|
122
|
Total
|
$
|
982
|
$
|
789
|
At June 30, 2019, Order Backlog
was $982 million, 24% higher than at
July 1, 2018. Order Backlog growth
was primarily driven by higher Order Bookings in the life sciences
and transportation markets, and Order Backlog from acquired
businesses.
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, and the addition of Comecer has strengthened ATS' customer
offerings in both pharmaceuticals and radiopharmaceuticals.
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 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 expects its Order Backlog of $982 million at the end of the first quarter of
fiscal 2020 to partially mitigate the impact of volatile Order
Bookings on revenues in the short term.
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 composition of the Company's Order Backlog changed in fiscal
2019, with the addition of several large, enterprise programs that
the Company won. These enterprise programs have longer periods of
performance and therefore longer revenue recognition cycles. In the
second quarter of fiscal 2020, management expects the conversion of
Order Backlog to revenues to be in the 30% to 35% 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 associated with
the Company's project-based business.
In order to increase capacity, the Company expects to increase
its investment in capital assets and intangible assets to
approximately $60 million in fiscal
2020 to fund planned expansions at several facilities. 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.
CONSOLIDATED RESULTS
(In millions of dollars, except
per share data)
|
Three
Months
|
Three
Months
|
|
Ended
|
Ended
|
|
June 30,
2019
|
July 1,
2018
|
Revenues
|
$
|
339.2
|
$
|
300.0
|
Cost of
revenues
|
|
247.7
|
|
222.1
|
Selling, general and
administrative
|
|
59.3
|
|
47.5
|
Stock-based
compensation
|
|
3.6
|
|
3.4
|
Earnings from
operations
|
$
|
28.6
|
$
|
27.0
|
Net finance
costs
|
$
|
7.1
|
$
|
5.2
|
Provision for income
taxes
|
|
5.1
|
|
5.1
|
Net
income
|
$
|
16.4
|
$
|
16.7
|
Basic and diluted
earnings per share
|
$
|
0.18
|
$
|
0.18
|
Revenues. At $339.2
million, consolidated revenues for the first quarter of
fiscal 2020 were $39.2 million, or
13% higher than in the corresponding period a year ago (see
"Overview – operating results").
Cost of revenues. At $247.7
million, first quarter fiscal 2020 cost of revenues
increased compared to the corresponding period a year ago by
$25.6 million, or 12% primarily due
to higher revenues. First quarter fiscal 2020 gross margin was 27%
compared to 26% in the corresponding period a year ago, due
primarily to improved program execution, and operational
utilization.
Selling, general and administrative ("SG&A")
expenses. SG&A expenses for the first quarter of fiscal
2020 were $59.3 million, which
included $9.4 million of amortization
costs related to the amortization of identifiable intangible assets
recorded on business acquisitions. Excluding these costs, SG&A
expenses were $49.9 million in the
first quarter of fiscal 2020. Comparably, SG&A expenses for the
first quarter of fiscal 2019 were $41.9
million, which excluded $5.6
million of amortization costs related to the amortization of
identifiable intangible assets recorded on business acquisitions.
Higher SG&A expenses in the first quarter of fiscal 2020
primarily reflected the addition of KMW and Comecer, and increased
sales-related expenses.
Stock-based compensation. Stock-based compensation
expense amounted to $3.6 million in
the first quarter of fiscal 2020 compared to $3.4 million in the corresponding period a year
ago.
Earnings from operations. For the three-month period
ended June 30, 2019, earnings from
operations were $28.6 million (8%
operating margin), compared to earnings from operations of
$27.0 million (9% operating margin)
in the corresponding period a year ago. Excluding the impact of
adoption of IFRS 16, earnings from operations were $27.7 million (8% operating margin) (see
"Overview – operating results").
Net finance costs. Net finance costs were
$7.1 million in the first quarter of
fiscal 2020, compared to $5.2 million
a year ago. The increase was primarily due to additional interest
expense recorded on lease liabilities due to the adoption of IFRS
16, and lower interest income compared to the corresponding period
a year ago.
Income tax provision. For the three months ended
June 30, 2019, the Company's
effective income tax rate of 23%, differed from the combined
Canadian basic federal and provincial income tax rate of 27%
primarily due to income earned in certain jurisdictions with
different statutory tax rates. The Company expects its effective
tax rate to remain in the range of 25%.
Net income. Fiscal 2020 first quarter net income was
$16.4 million (18 cents per share basic and diluted) compared to
$16.7 million (18 cents per share basic and diluted) for the
first quarter of fiscal 2019. Adjusted basic earnings per
share were 25 cents in the first
quarter of fiscal 2020 compared to 22
cents in the first quarter of fiscal 2019 (see
"Reconciliation of non-IFRS measures to IFRS measures").
Reconciliation of Non-IFRS Measures to IFRS
Measures
(In millions of dollars, except per share data)
The following table reconciles EBITDA to the most directly
comparable IFRS measure (net income):
|
|
Three
Months
|
|
Three
Months
|
|
|
Ended
|
|
Ended
|
|
|
June 30,
2019
|
|
July 1,
2018
|
EBITDA
|
$
|
47.2
|
$
|
36.8
|
Less: depreciation
and amortization expense
|
|
18.6
|
|
9.8
|
Earnings from
operations
|
$
|
28.6
|
$
|
27.0
|
Less: net finance
costs
|
|
7.1
|
|
5.2
|
Provision for income
taxes
|
|
5.1
|
|
5.1
|
Net
income
|
$
|
16.4
|
$
|
16.7
|
The following table reconciles adjusted earnings from operations
and adjusted basic earnings per share to the most directly
comparable IFRS measure (net income and basic earnings per
share):
|
Three Months Ended
June 30, 2019
|
Three Months Ended
June 1, 2018
|
|
IFRS
|
Adjustments
|
Adjusted
(non-IFRS)
|
IFRS
|
Adjustments
|
Adjusted
(non-IFRS)
|
Earnings from
operations
|
$
|
28.6
|
$
|
––
|
$
|
28.6
|
$
|
27.0
|
$
|
––
|
$
|
27.0
|
Amortization of
acquisition-
|
|
––
|
|
9.4
|
|
9.4
|
|
––
|
|
5.6
|
|
5.6
|
related intangible
assets
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
28.6
|
$
|
9.4
|
$
|
38.0
|
$
|
27.0
|
$
|
5.6
|
$
|
32.6
|
Less: net finance
costs
|
$
|
7.1
|
$
|
––
|
$
|
7.1
|
$
|
5.2
|
$
|
––
|
$
|
5.2
|
Income before
income taxes
|
$
|
21.5
|
$
|
9.4
|
$
|
30.9
|
$
|
21.8
|
$
|
5.6
|
$
|
27.4
|
Provision for income
taxes
|
$
|
5.1
|
$
|
––
|
$
|
5.1
|
$
|
5.1
|
$
|
––
|
$
|
5.1
|
Adjustment to
provision for
|
|
––
|
|
2.5
|
|
2.5
|
|
––
|
|
1.6
|
|
1.6
|
income
taxes1
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
5.1
|
$
|
2.5
|
$
|
7.6
|
$
|
5.1
|
$
|
1.6
|
$
|
6.7
|
Net
income
|
$
|
16.4
|
$
|
6.9
|
$
|
23.3
|
$
|
16.7
|
$
|
4.0
|
$
|
20.7
|
Basic earnings per
share
|
$
|
0.18
|
$
|
0.07
|
$
|
0.25
|
$
|
0.18
|
$
|
0.04
|
$
|
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.
|
LIQUIDITY, CASH FLOW AND FINANCIAL RESOURCES
(In
millions of dollars, except ratios)
As at
|
June 30,
2019
|
March 31,
2019
|
Cash and cash
equivalents
|
$
|
154.9
|
$
|
224.5
|
Debt-to-equity
ratio1
|
|
0.54:1
|
|
0.48:1
|
1 Debt is
calculated as bank indebtedness, long-term debt, and effective from
April 1, 2019 lease liabilities. Equity is calculated as total
equity less accumulated other comprehensive income.
|
|
|
|
|
|
For the three months
ended
|
June 30,
2019
|
July 1,
2018
|
Cash flows provided
(used) in operating activities
|
$
|
(40.0)
|
$
|
(0.4)
|
At June 30, 2019, the Company had
cash and cash equivalents of $154.9
million compared to $224.5
million at March 31, 2019. At
June 30, 2019, the Company's
debt-to-total equity ratio was 0.54:1 and reflected increased lease
liabilities due to the adoption of IFRS 16.
In the first quarter of fiscal 2020, cash flows used in
operating activities were $40.0
million ($0.4 million used in
operating activities in the corresponding period a year ago). The
decrease in operating cash flows related primarily to the timing of
investments in non-cash working capital in certain customer
programs.
In the first quarter of fiscal 2020, the Company's investment in
non-cash working capital increased by $87.2
million from March 31, 2019.
At June 30, 2019, accounts receivable
increased by 13%, or $28.5 million,
driven by the timing of billings in certain customer
contracts. Net contracts in progress increased 28%, or
$14.6 million, compared to
March 31, 2019. The Company
actively manages its accounts receivable and net contract in
progress balances through billing terms on long-term contracts,
collection efforts and supplier payment terms. Inventories
increased 10%, or $6.8 million,
primarily due to the timing of inventory purchases. Deposits and
prepaid assets increased 13%, or $3.8
million, compared to March 31,
2019 due to the timing of program execution. Accounts
payable and accrued liabilities decreased 8%, or $21.8 million, compared to March 31, 2019. Provisions decreased 1%, or
$0.2 million, compared to
March 31, 2019.
Capital expenditures totalled $6.4
million in the first quarter of fiscal 2020, primarily
related to the acquisition of computer hardware, office equipment,
and the improvement and expansion of certain manufacturing
facilities.
Intangible assets totalled $2.9
million for the first three months of fiscal 2020, primarily
related to computer software and various internal development
projects.
In the first quarter of fiscal 2020, the Company had
$623.9 million of unutilized
multipurpose credit, including letters of credit, available under
existing credit facilities and an additional $23.3 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 of the Company's subsidiaries. Certain of the Company's
subsidiaries also provide guarantees under the Credit Facility. At
June 30, 2019, the Company had
utilized $142.1 million under the
Credit Facility, by way of letters of credit (March 31, 2019 - $134.3
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 June 30, 2019,
all of the covenants were met.
The Company has additional credit facilities available of
$21.2 million (3.9 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 June 30,
2019 was $4.5 million, of
which $2.7 million was classified as
bank indebtedness (March 31, 2019 -
$2.0 million) and $1.7 million was classified as long-term debt
(March 31, 2019 - $18.6 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 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 June 30, 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
purchase obligations are as follows:
|
|
|
Less than one
year
|
$
|
137.2
|
One – two
years
|
|
2.3
|
Two – three
years
|
|
1.8
|
Three – four
years
|
|
0.2
|
Four – five
years
|
|
0.2
|
|
$
|
141.7
|
The Company's off-balance sheet arrangements consist of purchase
obligations which consist primarily of commitments for material
purchases, which have been entered into in the normal course of
business.
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 June 30, 2019, the total value of outstanding
letters of credit was approximately $207.2
million (March 31, 2019 -
$203.3 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 receivables insurance in certain instances.
During the first three months of fiscal 2020, 69,977 stock
options were exercised. At August 13,
2019, the total number of shares outstanding was 91,997,798,
and there were 1,619,043 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.
As at June 30, 2019, the Company
had 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
during the first three months of fiscal 2020.
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.
$150.0 million into Canadian dollars.
The Company will receive interest of 6.50% U.S. per annum and pay
interest of 6.501% Canadian. The terms of the hedging relationship
will end on June 15, 2023.
The Company manages foreign exchange risk on its
Euro-denominated net investments. The Company uses cross-currency
swaps as derivative financial instruments to hedge a portion of the
foreign exchange risk related to its Euro-denominated net
investment. On March 29, 2016, the
Company entered into a cross-currency interest rate swap instrument
to swap 134.1 million Euros into
Canadian dollars. The Company will receive interest of 6.501%
Canadian per annum and pay interest of 5.094% Euros. The terms of
the hedging relationship will end on June
15, 2023.
In addition, from time to time, the Company may hedge the
foreign exchange risk arising from foreign currency debt,
intercompany loans, net investments in foreign-based subsidiaries
and committed acquisitions through the use of forward foreign
exchange contracts or other non-derivative financial instruments.
The Company uses hedging as a risk management tool, not to
speculate.
Period Average Exchange Rates in CDN$
|
Three Months
Ended
|
|
June 30,
2019
|
July 1,
2018
|
% change
|
U.S.
Dollar
|
1.338
|
1.292
|
3.6%
|
Euro
|
1.503
|
1.536
|
(2.1%)
|
Consolidated Quarterly Results
(In millions of
dollars, except per share amounts)
|
Q1
|
Q4
|
Q3
|
Q2
|
Q1
|
Q4
|
Q3
|
Q2
|
|
2020
|
2019
|
2019
|
2019
|
2019
|
2018
|
2018
|
2018
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenues
|
$
|
339.2
|
$
|
348.6
|
$
|
321.4
|
$
|
283.6
|
$
|
300.0
|
$
|
298.4
|
$
|
277.6
|
$
|
274.9
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings from
operations
|
$
|
28.6
|
$
|
30.3
|
$
|
38.5
|
$
|
19.0
|
$
|
27.0
|
$
|
25.5
|
$
|
14.8
|
$
|
23.9
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted earnings
from
operations
|
$
|
38.0
|
$
|
38.2
|
$
|
46.7
|
$
|
25.4
|
$
|
32.6
|
$
|
32.8
|
$
|
29.3
|
$
|
28.8
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income
|
$
|
16.4
|
$
|
18.2
|
$
|
25.1
|
$
|
10.8
|
$
|
16.7
|
$
|
15.0
|
$
|
6.9
|
$
|
13.8
|
Basic and diluted
earnings
per share
|
$
|
0.18
|
$
|
0.20
|
$
|
0.27
|
$
|
0.11
|
$
|
0.18
|
$
|
0.16
|
$
|
0.07
|
$
|
0.15
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted basic
earnings per
share
|
$
|
0.25
|
$
|
0.26
|
$
|
0.33
|
$
|
0.17
|
$
|
0.22
|
$
|
0.22
|
$
|
0.18
|
$
|
0.18
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Order
Bookings
|
$
|
423.0
|
$
|
298.0
|
$
|
397.0
|
$
|
355.0
|
$
|
358.0
|
$
|
348.0
|
$
|
311.0
|
$
|
257.0
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Order
Backlog
|
$
|
982.0
|
$
|
904.0
|
$
|
926.0
|
$
|
830.0
|
$
|
789.0
|
$
|
746.0
|
$
|
689.0
|
$
|
648.0
|
Interim financial results are not necessarily indicative of
annual or longer-term results because many of the individual
markets served by the Company tend to be cyclical in nature.
Operating performance quarter to quarter may also be affected by
the timing of revenue recognition on large programs in Order
Backlog, which is impacted by such factors as customer delivery
schedules, the timing of third-party content, and by the timing of
acquisitions. General economic trends, product life cycles and
product changes may impact revenues and operating performance. ATS
typically experiences some seasonality in its second fiscal quarter
with its Order Bookings, revenues and earnings from operations due
to higher employee vacation time and 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. There have been no material changes to the critical
accounting estimates described in the Company's 2019 MD&A.
ACCOUNTING STANDARD ADOPTED IN THE FIRST QUARTER OF FISCAL
2020
IFRS 16 – Leases
The Company adopted IFRS 16, Leases
("IFRS 16"), using the modified retrospective approach and
accordingly the information presented for the 2019 reporting period
has not been restated.
IFRS 16 introduced significant changes to the lessee accounting
by removing the distinction between operating and finance leases
and requiring the recognition of a right-of-use asset ("ROU asset")
and a lease liability at the lease commencement for all leases,
except for short-term leases (lease terms of twelve months or less)
and leases of low-value assets. In applying IFRS 16, the
Company recognized ROU assets and lease liabilities in the interim
condensed consolidated statement of financial position, initially
measured at the present value of future lease payments; recognized
depreciation of ROU assets and interest on lease liabilities in the
interim consolidated statements of income; and separated the total
amount of lease payments into a principal portion (presented in
financing activities) and interest (presented within operating
activities) in the consolidated statements of cash flows. For
short-term leases and leases of low-value assets, the Company has
elected not to recognize right-of-use assets and lease
liabilities. The respective lease payments associated with
these leases are recognized in the interim consolidated statements
of income on a straight-line basis.
For leases that were classified as operating leases under IAS
17, lease liabilities at transition have been measured at the
present value of remaining lease payments, discounted at the
Company's incremental borrowing rate of 5% as at April 1, 2019.
The Company has used the following practical expedients
permitted by the standard:
- Use a single discount rate to a portfolio of leases with
reasonably similar characteristics;
- Applied the standard only to contracts that were previously
identified as leases under IAS 17 at the date of initial
application;
- Applied the recognition exemptions for low-value leases and
leases that end within twelve months at the date of application,
and accounted for them as low-value and short-term leases
respectively;
- Accounted for non-lease components and lease components as a
single lease component;
- Relied on previous assessments of whether leases are
onerous;
- Used hindsight in determining the lease term where the contract
contains options to extend or terminate the lease.
On transition to IFRS 16 at April 1,
2019, the Company recognized ROU assets of $74.3 million, lease liabilities of $74.5 million, and reduced retained earnings by
$0.2 million in the interim
consolidated statement of financial position.
At March 31, 2019, the minimum
operating lease obligations of the Company were $42.9 million, as presented in the audited
consolidated financial statements. The difference between the lease
liabilities of $74.5 million at
April 1, 2019, and the minimum lease
obligation disclosed at March 31,
2019 was mainly due to: (i) the impact of discounting the
remaining lease payments; (ii) the exclusion of short-term leases,
and leases of low-value; (iii) the inclusion of non-lease
components in measuring the lease liability; and (iv) assumptions
made on the probability of exercising early termination or renewal
options.
For the three months ended June 30,
2019, the Company recognized expense related to short-term,
and low-value leases of $1.0 million
in cost of revenues, and $0.4 million
in selling, general and administrative expenses in the consolidated
statements of income.
The following accounting policy is applicable from April 1, 2019:
At the inception of a contract, the Company determines whether a
contract is, or contains, a lease based on whether the contract
conveys the right to control the use of an underlying asset for a
period of time in exchange for consideration. The Company
recognizes an ROU asset and a lease liability on the date the
leased asset is available for use by the Company (at the
commencement of the lease).
Right-of-use assets
ROU assets are initially measured
at cost, which is comprised of the initial amount of the lease
liability, any initial direct costs incurred and an estimate of
costs to dismantle, remove or restore the underlying asset or site
on which it is located, less any lease payments made at or before
the commencement date. Unless the Company is reasonably certain to
obtain ownership of the leased asset at the end of the lease term,
a recognized ROU asset is depreciated using the straight-line
method over the shorter of its estimated useful life or the lease
term. The ROU asset may be adjusted for certain remeasurements of
the lease liability and impairment losses.
Lease liabilities
The lease liability is initially
measured at the present value of the lease payments that are not
paid at the commencement date, discounted using the incremental
borrowing rate at the lease commencement date if the interest rate
implicit in the lease is not readily available. The Company uses a
single discount rate for a portfolio of leases with reasonably
similar characteristics. Lease payments include fixed payments less
any lease incentives, and any variable lease payments where
variability depends on an index or rate. The lease payments
also include the exercise price of a purchase option reasonably
certain to be exercised by the Company and payment of penalties for
termination of a lease. Each lease payment is allocated between the
repayment of the principal portion of the lease liability and the
interest portion. The finance cost is charged to net finance costs
in the interim consolidated statements of income over the lease
period. Payments associated with short-term leases (lease term of
12 months or less) and leases of low-value assets are recognized on
a straight-line basis as an expense in the interim consolidated
statements of income as permitted by IFRS 16.
The carrying amount of the lease liability is remeasured if
there is a modification resulting in a change in the lease term, a
change in the future lease payments, or a change in the Company's
estimate of whether it will exercise a purchase, extension or
termination option. If the lease liability is remeasured, a
corresponding adjustment is made to the ROU asset.
As a practical expedient, IFRS 16 permits a lessee to not
separate non-lease components, but instead account for any lease
and associated non-lease components as a single arrangement.
The Company has applied this practical expedient.
Determining the lease term of contracts with renewal or
termination options
The lease term includes the
non-cancellable term of the lease including extension and
termination options if the Company is reasonably certain to
exercise the option. The Company applies judgement in evaluating
whether it is reasonably certain to exercise the options. All
relevant factors that create an economic incentive for it to
exercise the renewal are considered. After the commencement date,
the Company reassesses the lease term if there is a significant
event or change in circumstances that is within its control and
affects its ability to exercise (or not to exercise) the
option.
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").
Management, including the CEO and CFO, does not expect that the
Company's disclosure controls or internal controls over financial
reporting will prevent or detect all errors and all fraud or will
be effective under all potential future conditions. A control
system is subject to inherent limitations and, no matter how well
designed and operated, can provide only reasonable, not absolute,
assurance that the control system's objectives will be met.
During the three months ended June 30,
2019, 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 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' interim condensed
consolidated financial statements for the period ended June 30, 2019.
(millions of
dollars)
|
Comecer
|
Revenue1
|
24.9
|
Net
income1
|
(1.6)
|
Current
assets2
|
58.4
|
Non-current
assets2
|
187.2
|
Current
liabilities2
|
52.5
|
Non-current
liabilities2
|
108.2
|
1 Results
from April 1, 2019 to June 30, 2019, includes amortization of
acquisition-related intangible assets.
|
2 Interim consolidated statements of
financial position as at June 30, 2019
|
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 Company's expectation with
respect to effective tax rate; 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 effective tax rate is other than expected, due
to reasons including income spread among jurisdictions being other
than anticipated; 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. Interim Consolidated Statements of
Financial Position (in thousands of Canadian dollars -
unaudited)
|
As
at
|
Note
|
June 30
2019
|
March 31
2019
|
|
|
|
|
|
|
ASSETS
|
|
|
|
|
|
Current
assets
|
11
|
|
|
|
|
Cash and cash
equivalents
|
|
$
|
154,862
|
$
|
224,540
|
Accounts
receivable
|
|
|
246,103
|
|
217,245
|
Income tax
receivable
|
|
|
4,609
|
|
4,938
|
Contract
assets
|
17
|
|
213,139
|
|
213,553
|
Inventories
|
5
|
|
74,761
|
|
67,998
|
Deposits, prepaids
and other
assets
|
6
|
|
32,543
|
|
28,719
|
|
|
|
726,017
|
|
756,993
|
Non-current
assets
|
|
|
|
|
|
Property, plant and
equipment
|
|
|
99,599
|
|
97,669
|
Right-of-use
assets
|
7
|
|
71,349
|
|
––
|
Other
assets
|
8
|
|
636
|
|
2,446
|
Goodwill
|
|
|
549,926
|
|
551,643
|
Intangible
assets
|
|
|
208,272
|
|
213,945
|
Deferred income tax
assets
|
|
|
2,812
|
|
3,194
|
Investment tax credit
receivable
|
|
|
61,705
|
|
62,953
|
|
|
|
994,299
|
|
931,850
|
Total
assets
|
|
$
|
1,720,316
|
$
|
1,688,843
|
|
|
|
|
|
|
LIABILITIES AND
EQUITY
|
|
|
|
|
|
Current
liabilities
|
|
|
|
|
|
Bank
indebtedness
|
11
|
$
|
2,725
|
$
|
1,950
|
Accounts payable and
accrued
liabilities
|
|
|
238,307
|
|
254,227
|
Income tax
payable
|
|
|
1,851
|
|
7,721
|
Contract
liabilities
|
17
|
|
146,128
|
|
161,139
|
Provisions
|
10
|
|
13,774
|
|
13,943
|
Current portion of
lease
liabilities
|
7
|
|
14,035
|
|
––
|
Current portion of
long-term
debt
|
11
|
|
1,660
|
|
18,550
|
|
|
|
418,480
|
|
457,530
|
Non-current
liabilities
|
|
|
|
|
|
Employee
benefits
|
|
|
27,974
|
|
28,187
|
Long-term lease
liabilities
|
7
|
|
57,937
|
|
––
|
Long-term
debt
|
11
|
|
321,909
|
|
328,247
|
Deferred income tax
liabilities
|
|
|
82,225
|
|
78,585
|
Other long-term
liabilities
|
8
|
|
6,721
|
|
6,663
|
|
|
|
496,766
|
|
441,682
|
Total
liabilities
|
|
$
|
915,246
|
$
|
899,212
|
|
|
|
|
|
|
Commitments and
contingencies
|
11, 15
|
|
|
|
|
|
|
|
|
|
|
EQUITY
|
|
|
|
|
|
Share
capital
|
12
|
$
|
517,632
|
$
|
516,613
|
Contributed
surplus
|
|
|
11,692
|
|
11,709
|
Accumulated other
comprehensive
income
|
|
|
67,793
|
|
69,549
|
Retained
earnings
|
|
|
207,643
|
|
191,449
|
Equity attributable
to
shareholders
|
|
|
804,760
|
|
789,320
|
Non-controlling
interests
|
|
|
310
|
|
311
|
Total
equity
|
|
|
805,070
|
|
789,631
|
Total liabilities
and
equity
|
|
$
|
1,720,316
|
$
|
1,688,843
|
ATS AUTOMATION
TOOLING SYSTEMS INC.
Interim
Consolidated Statements of Income
(in thousands of
Canadian dollars, except per share amounts - unaudited)
|
For the three months
ended
|
Note
|
June 30
2019
|
July 1
2018
|
|
|
|
|
|
|
|
Revenues
|
|
|
|
|
|
Revenues from
construction
contracts
|
|
$
|
198,285
|
$
|
186,292
|
Sale of goods
|
|
|
33,387
|
|
21,624
|
Services
rendered
|
|
|
107,552
|
|
92,064
|
|
|
|
|
|
|
Total
revenues
|
17
|
|
339,224
|
|
299,980
|
|
|
|
|
|
|
Operating costs and
expenses
|
|
|
|
|
|
Cost of revenues
|
|
|
247,666
|
|
222,043
|
Selling, general and
administrative
|
|
|
59,349
|
|
47,491
|
Stock-based
compensation
|
14
|
|
3,638
|
|
3,435
|
|
|
|
|
|
|
Earnings from
operations
|
|
|
28,571
|
|
27,011
|
|
|
|
|
|
|
Net finance costs
|
18
|
|
7,129
|
|
5,233
|
|
|
|
|
|
|
Income before
income
taxes
|
|
|
21,442
|
|
21,778
|
|
|
|
|
|
|
Income tax
expense
|
13
|
|
5,028
|
|
5,103
|
|
|
|
|
|
|
Net
income
|
|
$
|
16,414
|
$
|
16,675
|
|
|
|
|
|
|
Attributable
to
|
|
|
|
|
|
Shareholders
|
|
$
|
16,415
|
$
|
16,670
|
Non-controlling
interests
|
|
|
(1)
|
|
5
|
|
|
$
|
16,414
|
$
|
16,675
|
|
|
|
|
|
|
Earnings per share
attributable to
shareholders
|
|
|
|
|
|
Basic and
diluted
|
19
|
$
|
0.18
|
$
|
0.18
|
ATS AUTOMATION
TOOLING SYSTEMS INC. Interim Consolidated Statements of
Comprehensive Income (in thousands of Canadian dollars -
unaudited)
|
|
June
30
|
July 1
|
For the three months
ended
|
2019
|
2018
|
|
|
|
|
|
Net
income
|
$
|
16,414
|
$
|
16,675
|
|
|
|
|
|
Other comprehensive
income
(loss):
|
|
|
|
|
|
|
|
|
|
Items to be
reclassified subsequently to net income:
|
|
|
|
|
|
|
|
|
|
Currency translation
adjustment (net of income taxes of $nil)
|
|
(2,287)
|
|
(15,552)
|
|
|
|
|
|
Net unrealized gain on
derivative financial
instruments
|
|
2,647
|
|
1,363
|
designated as cash
flow hedges
|
|
|
|
|
Tax impact
|
|
(657)
|
|
(341)
|
|
|
|
|
|
Loss (gain)
transferred to net income for derivatives
|
|
(136)
|
|
5
|
designated as cash
flow hedges
|
|
|
|
|
Tax impact
|
|
34
|
|
(5)
|
|
|
|
|
|
Cash flow hedge
reserve
adjustment
|
|
(1,809)
|
|
9,362
|
Tax
impact
|
|
452
|
|
(2,340)
|
|
|
|
|
|
Other
comprehensive
loss
|
|
(1,756)
|
|
(7,508)
|
|
|
|
|
|
Comprehensive
income
|
$
|
14,658
|
$
|
9,167
|
|
|
|
|
|
Attributable
to
|
|
|
|
|
Shareholders
|
$
|
14,659
|
$
|
9,162
|
Non-controlling
interests
|
|
(1)
|
|
5
|
|
$
|
14,658
|
$
|
9,167
|
ATS AUTOMATION
TOOLING SYSTEMS INC. Interim Consolidated Statements of
Changes in Equity (in thousands of Canadian dollars -
unaudited)
|
Three months ended
June 30, 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, 2019
|
$
|
516,613
|
$
|
11,709
|
$
|
191,449
|
$
|
67,773
|
$
|
1,776
|
$
|
69,549
|
$
|
311
|
$
|
789,631
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adoption of IFRS 16
(note 2)
|
|
––
|
|
––
|
|
(221)
|
|
––
|
|
––
|
|
––
|
|
––
|
|
(221)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
At April 1, 2019
(adjusted)
|
$
|
516,613
|
$
|
11,709
|
$
|
191,228
|
$
|
67,773
|
$
|
1,776
|
$
|
69,549
|
$
|
311
|
$
|
789,410
|
Net
income
|
|
––
|
|
––
|
|
16,415
|
|
––
|
|
––
|
|
––
|
|
(1)
|
|
16,414
|
Other comprehensive
income (loss)
|
|
––
|
|
––
|
|
––
|
|
(2,287)
|
|
531
|
|
(1,756)
|
|
––
|
|
(1,756)
|
Total comprehensive
income (loss)
|
|
––
|
|
––
|
|
16,415
|
|
(2,287)
|
|
531
|
|
(1,756)
|
|
(1)
|
|
14,658
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stock-based
compensation
|
|
––
|
|
263
|
|
––
|
|
––
|
|
––
|
|
––
|
|
––
|
|
263
|
Exercise of stock
options
|
|
1,019
|
|
(280)
|
|
––
|
|
––
|
|
––
|
|
––
|
|
––
|
|
739
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance, as at
June 30, 2019
|
$
|
517,632
|
$
|
11,692
|
$
|
207,643
|
$
|
65,486
|
$
|
2,307
|
$
|
67,793
|
$
|
310
|
$
|
805,070
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three months ended
July 1, 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, 2018
|
$
|
548,747
|
$
|
12,535
|
$
|
121,369
|
$
|
79,918
|
$
|
(4,088)
|
$
|
75,830
|
$
|
292
|
$
|
758,773
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
income
|
|
––
|
|
––
|
|
16,670
|
|
––
|
|
––
|
|
––
|
|
5
|
|
16,675
|
Other comprehensive
income (loss)
|
|
––
|
|
––
|
|
––
|
|
(15,552)
|
|
8,044
|
|
(7,508)
|
|
––
|
|
(7,508)
|
Total comprehensive
income (loss)
|
|
––
|
|
––
|
|
16,670
|
|
(15,552)
|
|
8,044
|
|
(7,508)
|
|
5
|
|
9,167
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stock-based
compensation
|
|
––
|
|
292
|
|
––
|
|
––
|
|
––
|
|
––
|
|
––
|
|
292
|
Exercise of stock
options
|
|
1,348
|
|
(293)
|
|
––
|
|
––
|
|
––
|
|
––
|
|
––
|
|
1,055
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance, as at July
1, 2018
|
$
|
550,095
|
$
|
12,534
|
$
|
138,039
|
$
|
64,366
|
$
|
3,956
|
$
|
68,322
|
$
|
297
|
$
|
769,287
|
ATS AUTOMATION
TOOLING SYSTEMS INC. Interim Consolidated Statements of
Cash Flows (in thousands of Canadian dollars -
unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
Three months
ended
|
Note
|
|
June
30
2019
|
|
July 1
2018
|
|
|
|
|
|
|
Operating
activities
|
|
|
|
|
|
Net income
|
|
$
|
16,414
|
$
|
16,675
|
Items not involving
cash
|
|
|
|
|
|
Depreciation of
property, plant and
equipment
|
|
|
3,546
|
|
2,787
|
Amortization of
right-of-use
assets
|
7
|
|
3,738
|
|
––
|
Amortization of
intangible
assets
|
|
|
11,355
|
|
7,059
|
Deferred income
taxes
|
13
|
|
(196)
|
|
1,388
|
Other items not
involving
cash
|
|
|
6,198
|
|
(1,779)
|
Stock-based
compensation
|
14
|
|
3,638
|
|
3,435
|
|
|
|
44,693
|
|
29,565
|
Change in non-cash
operating working
capital
|
|
|
(84,712)
|
|
(29,946)
|
Cash flows used in
operating
activities
|
|
$
|
(40,019)
|
$
|
(381)
|
|
|
|
|
|
|
Investing
activities
|
|
|
|
|
|
Acquisition of
property, plant and
equipment
|
|
$
|
(6,415)
|
$
|
(4,563)
|
Acquisition of
intangible
assets
|
|
|
(2,933)
|
|
(1,576)
|
Proceeds from
disposal of property, plant and
equipment
|
|
|
46
|
|
130
|
Cash flows used in
investing
activities
|
|
$
|
(9,302)
|
$
|
(6,009)
|
|
|
|
|
|
|
Financing
activities
|
|
|
|
|
|
Bank
indebtedness
|
|
$
|
836
|
$
|
18
|
Repayment of
long-term debt
|
|
|
(16,958)
|
|
(199)
|
Proceeds from
long-term
debt
|
|
|
19
|
|
36
|
Proceeds from
exercise of stock
options
|
|
|
739
|
|
1,055
|
Lease
payments
|
|
|
(3,290)
|
|
––
|
Cash flows
provided by (used in) financing
activities
|
|
$
|
(18,654)
|
$
|
910
|
|
|
|
|
|
|
Effect of exchange
rate changes on cash and cash
equivalents
|
|
|
(1,703)
|
|
(24)
|
|
|
|
|
|
|
Decrease in cash and
cash
equivalents
|
|
|
(69,678)
|
|
(5,504)
|
|
|
|
|
|
|
Cash and cash
equivalents, beginning of
period
|
|
|
224,540
|
|
330,148
|
|
|
|
|
|
|
Cash and cash
equivalents, end of
period
|
|
$
|
154,862
|
$
|
324,644
|
|
|
|
|
|
|
Supplemental
information
|
|
|
|
|
|
Cash income taxes
paid
|
|
$
|
4,171
|
$
|
752
|
Cash interest
paid
|
|
$
|
12,429
|
$
|
11,146
|
SOURCE ATS Automation Tooling Systems Inc.