CAMBRIDGE, ON, Dec. 16, 2019 /CNW/ - ATS Automation Tooling
Systems Inc. (TSX: ATA) ("ATS" or the "Company"), an
industry-leading automation solutions provider, today announced it
has acquired MARCO Limited ("MARCO"), a provider of yield control
and recipe formulation systems to help customers in the food,
nutraceuticals and cosmetics sectors increase productivity and meet
stringent industry regulations. MARCO's solutions are based on its
proprietary weighing hardware and process control software
technologies.
"MARCO is a high-quality company that provides ATS with the
means of entering a product-based, niche segment of the food
industry that is growing at a mid-single digit rate," said
Andrew Hider, Chief Executive
Officer of ATS. "The food industry itself is attractive to ATS
because it is subject to industry and government regulations
driving a need for high precision technologies. In MARCO, we
acquire a proven business that is well positioned to meet growing
demand for productivity and quality-enhancing solutions. MARCO will
serve as a first step in our expansion into an attractive new
vertical market for ATS."
In its fiscal year ending March 31,
2020, MARCO is expected to generate revenues of
approximately £15 million Pounds Sterling with an EBITDA margin in
the low- to mid-twenty percent range. Excluding the impact of
business combination accounting, ATS expects to achieve a ten
percent return on invested capital by the second fiscal year
following the acquisition.
ATS will support MARCO's growth through deployment of the ATS
Business Model to drive operational improvements, advance
geographic penetration, enter adjacent markets and expand
after-sales service revenues, which currently account for
approximately 10% of MARCO's annual revenues. The combined
capabilities of ATS and MARCO will serve the rising demand for
quality and productivity in food processing and
packing.
The preliminary cash purchase price for the acquisition was £25
million Pounds Sterling, with up to an additional £7.3 million
Pounds Sterling payable subject to an earn-out structure over the
next two full fiscal years. ATS funded the acquisition from cash on
hand.
MARCO was established in 1985, and today has approximately 70
employees, the majority of whom work at its headquarters in
Edenbridge, United Kingdom. MARCO
will continue to be led by its founders, CEO, Murray Hilborne and COO, Russel Hilborne. "Joining ATS enables us to take
advantage of ATS's global reach, industry-leading technologies and
after-market services platform," said Mr. Murray Hilborne. "This exciting combination will
benefit MARCO's customers and employees. The management team and I
look forward to working with ATS to enable MARCO to take the next
step in realizing its full potential and ambitions."
Additional Information
Additional information on
MARCO, its markets and the transaction are contained in a slide
deck available on the ATS website (www.atsautomation.com) under
Investor Relations / Investor Presentations.
About ATS
ATS is an industry-leading automation
solutions provider to many of the world's most successful
companies. ATS uses its extensive knowledge base and global
capabilities in custom automation, repeat automation, automation
products and value-added services, including pre-automation and
after-sales services, to address the sophisticated manufacturing
automation systems and service needs of multinational customers in
markets such as life sciences, chemicals, consumer products,
electronics, food, beverage, transportation, energy, and oil and
gas. Founded in 1978, ATS employs approximately 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.
About MARCO
MARCO offers innovative hardware and
software solutions that provide control from the arrival of the raw
material to the dispatch of the packed product within the business'
operations. Based on the MARCO Trac-IT® suite of products, these
yield control systems offer weighing-centric controls and are
designed to maximize productivity, minimize over-pack, monitor
operator performance, identify unaccountable losses and ensure pack
consistency. MARCO's systems provide IIoT-enabled smart factory
capability through real time reporting, allowing customers to make
informed decisions about all aspects of their facility. MARCO's
installations range from standalone hardware applications to
factory-wide Manufacturing Execution Systems. MARCO's products have
been installed in 43 countries within the food, nutraceutical, and
cosmetics industries. For more information, please visit
www.marco.co.uk.
Note to Readers:
Non-IFRS measures:
This news release uses the
non-IFRS measures EBITDA, EBITDA margin, and return on invested
capital associated with this investment. These terms do not have
any standardized meanings prescribed within IFRS and therefore may
not be comparable to similar measures presented by other companies.
These measures should not be considered in isolation or as a
substitute for measures of performance prepared in accordance with
IFRS. EBITDA is defined as earnings from operations excluding
depreciation and amortization (which includes amortization of
intangible assets). EBITDA margin is an expression of an entity's
EBITDA as a percentage of revenues. EBITDA is used by the Company
to evaluate the performance of operations. Management believes that
EBITDA is an important indicator of ability to generate operating
cash flows to fund continued investment in operations. Management
believes that ATS shareholders and potential investors in ATS use
these non-IFRS financial measures in making investment decisions
and measuring operational results. Return on invested capital
associated with this investment, as used herein, means in respect
of any fiscal year, the net income of MARCO in such fiscal year,
divided by the purchase price for the acquisition. Return on
invested capital, as used herein, is used by ATS to evaluate the
efficiency of the allocation of ATS' capital.
Forward-Looking Statements:
This news release
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 growth of the market MARCO serves and MARCO
positioning to meet demand; expectations relating to MARCO revenue
and EBITDA margin; expectations relating to ATS' return on invested
capital associated with this investment; and expectations regarding
ATS support for MARCO, integration and deployment of the ATS
Business Model. The risks and uncertainties that may affect
forward-looking statements include, among others: impact of the
global economy and general market performance including capital
market conditions and availability and cost of credit; performance
of the market sectors that MARCO and ATS serve; 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; failure or
delays associated with new customer programs; that ATS support,
integration and the deployment of the ATS Business Model are not
completed as quickly or effectively as planned or expected and, as
a result, anticipated benefits, enhancements and synergies are not
realized; that MARCO's business does not perform as expected,
negatively impacting revenue and EBITDA margin and return on
invested capital; that one or more customers, or other persons with
which MARCO has contracted, experience insolvency or bankruptcy
with resulting delays, costs or losses; political, labour or
supplier disruptions; imposition of new duties, tariffs or other
legal barriers that impact MARCO's markets; that growth in markets
MARCO serves is less than expected; risks relating to legal
proceedings to which MARCO and/or ATS is or may become a party;
exposure to product liability claims; risks associated with greater
than anticipated tax liabilities or expenses; and other risks
detailed from time to time in ATS' filings with Canadian provincial
securities regulators. Forward-looking statements are based
on management's current plans, estimates, projections, beliefs and
opinions, and other than as required by applicable securities laws,
ATS does not undertake any obligation to update forward-looking
statements should assumptions related to these plans, estimates,
projections, beliefs and opinions change.
SOURCE ATS Automation Tooling Systems Inc.