CAMBRIDGE, ON, Feb. 5, 2020 /CNW/ - ATS Automation Tooling
Systems Inc. (TSX: ATA) ("ATS" or the "Company") today
reported financial results for the three and nine months ended
December 29, 2019.
Third quarter highlights:
- Revenues increased 14% to $367.2
million. Organic growth in revenues was 5% with 9% coming
from acquired businesses.
- The Company initiated a previously announced reorganization
plan. See "Reorganization Plan".
- Earnings from operations were $10.4
million (3% operating margin), compared to $38.5 million (12% operating margin) a year ago.
Adjusted earnings from operations1 were $37.5 million (10% margin), compared to
$46.7 million (15% margin) a year
ago.
- EBITDA1 was $26.8
million (7% EBITDA margin), compared to $48.7 million (15% EBITDA margin) a year ago.
Lower EBITDA primarily reflected restructuring charges, higher
stock compensation expenses and operating inefficiencies from the
implementation of the Reorganization Plan.
- Earnings per share were 4 cents
basic and diluted compared to 27
cents a year ago.
- Adjusted basic earnings per share1 were 26 cents compared to 33
cents a year ago.
- Order Bookings were $368 million,
7% lower than a year ago.
- Order Backlog increased 1% to $939
million at December 29, 2019
compared to $926 million a year
ago.
- The Company acquired MARCO Limited, a leading provider of yield
control and recipe formulation systems. See "Business Acquisitions
– MARCO Limited".
"Third quarter performance featured year-over-year growth in
revenues," said Andrew Hider, Chief
Executive Officer. "Operationally, we initiated a reorganization
plan designed to reallocate capital from underperforming facilities
to high-performing facilities to support growth and drive continued
performance improvement. When complete, this plan will contribute
to our margin expansion plans and improve our return on invested
capital."
Year-to-date highlights:
- Revenues increased 16% to $1,047.6
million. Organic growth in revenues was 7% with 9% coming
from acquisitions.
- Earnings from operations were $70.7
million (7% operating margin), compared to $84.5 million (9% operating margin) in the prior
year.
- Adjusted earnings from operations1 were $118.0 million (11% margin), compared to
$104.6 million (12% margin) in the
prior year.
- EBITDA1 was $123.8
million (12% EBITDA margin), compared to $114.6 million (13% EBITDA margin) in the prior
year.
- Earnings per share was 43 cents
basic and diluted compared to 56
cents in the prior year.
- Adjusted basic earnings per share1 increased 11% to
80 cents from 72 cents a year ago.
- Order Bookings of $1,112 million
were comparable to the corresponding period a year ago.
Mr. Hider added, "We have continued to execute on our M&A
strategy with the acquisition of MARCO, a leading provider of yield
control solutions for food and related markets. This is a first
step for ATS into an attractive new vertical that provides a
stable, mid-single digit growth rate, and is subject to regulation
that drives the ongoing need for high-precision technologies.
Integration of Comecer is on track as demonstrated by the
$32 million joint program win in the
third quarter for a new pharmaceutical customer. Going forward, we
have a strong balance sheet that will allow us to continue pursuing
our value creation strategy, build, grow and expand, with the goal
of creating long-term shareholder value."
Financial results
(In millions of dollars unless
otherwise stated)
|
3 months ended
December 29, 2019
|
3 months
ended December 30,
2018
|
9 months
ended December 29,
2019
|
9 months
ended December 30,
2018
|
Revenues
|
$
|
367.2
|
$
|
321.4
|
$
|
1,047.6
|
$
|
905.0
|
Earnings from
operations
|
$
|
10.4
|
$
|
38.5
|
$
|
70.7
|
$
|
84.5
|
Adjusted earnings
from
|
|
|
|
|
operations1
|
$
|
37.5
|
$
|
46.7
|
$
|
118.0
|
$
|
104.6
|
EBITDA1
|
$
|
26.8
|
$
|
48.7
|
$
|
123.8
|
$
|
114.6
|
Net
income
|
$
|
4.1
|
$
|
25.1
|
$
|
39.9
|
$
|
52.6
|
Adjusted basic
earnings per
|
|
|
|
|
share1
|
$
|
0.26
|
$
|
0.33
|
$
|
0.80
|
$
|
0.72
|
Basic and diluted
earnings
|
|
|
|
|
per
share
|
$
|
0.04
|
$
|
0.27
|
$
|
0.43
|
$
|
0.56
|
1 Non-IFRS
measure: see "Notice to Reader: Non-IFRS Measures and Additional
IFRS Measures".
|
Reorganization Plan
ATS previously announced the
investment of capital in targeted high-performing facilities
globally, as part of a $60 million
plan to increase capacity and address the Company's significant
Order Backlog. To drive continued improvement in operations and
focus investment in strategic growth areas of the business, the
Company initiated a reorganization plan in the third quarter of
fiscal 2020. The reorganization plan includes the consolidation of
certain operations and the closure of some underperforming
facilities and small branch offices – none of which are
strategically important to future growth. Costs to implement the
restructuring are comprised primarily of severances and lease
termination costs. The Company has recorded charges of $2.0 million and $18.8
million in the second and third quarters, respectively, with
approximately $6 million expected to
be recorded in the fourth quarter. In addition, operating margins
were negatively impacted by approximately $5
million in the third quarter, with a similar impact expected
in the fourth quarter, due primarily to unabsorbed costs from
closing facilities and cost inefficiencies from transferring
projects. Certain of the Company's foreign operations have engaged
in normal course consultation processes regarding the
reorganization plan. As a result of the expected improvements in
the Company's cost structure and elimination of unprofitable
facilities, commencing in fiscal 2021, management expects
annualized improvements to operating earnings of approximately
$15 million to $18 million, and operating margins to be
positively impacted by approximately 110 basis points to 130 basis
points based on the Company's trailing twelve month revenues.
Third quarter summary
Fiscal 2020 third quarter
revenues were 14% higher than in the corresponding period a year
ago and included $31.3 million of
revenues earned by acquired companies (see "Business
Acquisitions"). Excluding acquired companies, third quarter
revenues were $335.9 million, a 5%
increase compared to the corresponding period a year ago, primarily
reflecting Order Backlog, which, excluding the impact of acquired
Order Backlog, was 4% higher entering the third quarter of fiscal
2020 compared to a year ago. Revenues generated from construction
contracts and services increased 17% and 3%, respectively, compared
to the corresponding period a year ago.
By market, revenues generated in life sciences increased 33% due
to higher Order Backlog entering the third quarter of fiscal 2020
primarily due to additional revenues for medical device and
radiopharmaceutical applications. Revenues in the transportation
market increased 29% due to higher Order Backlog for both electric
vehicle and internal combustion engine projects entering the third
quarter of fiscal 2020. Revenues from consumer products decreased
30% due primarily to lower activity in warehousing automation.
Revenues from energy markets decreased 39%, due to timing of
project performance, primarily in the nuclear market.
Fiscal 2020 third quarter earnings from operations were
$10.4 million (3% operating margin)
compared to $38.5 million (12%
operating margin) in the third quarter of fiscal 2019. Third
quarter fiscal 2020 earnings from operations included $18.8 million of restructuring charges incurred
as part of the Company's reorganization plan (see "Reorganization
Plan"), $1.4 million of incremental
costs related to the Company's acquisition activity, down from
$2.7 million in the comparable period
a year ago, and $6.9 million related
to amortization of acquisition-related intangible assets, up from
$5.5 million of amortization of
acquisition-related intangible assets in the comparable period a
year ago.
Excluding these items in both quarters, third quarter fiscal
2020 adjusted earnings from operations were $37.5 million (10% margin), compared to adjusted
earnings from operations of $46.7
million (15% margin) a year ago. As expected, third quarter
fiscal 2020 adjusted earnings from operations reflected a lower
gross margin due to inefficiencies from the implementation of the
Reorganization Plan, which negatively impacted earnings by
approximately $5.0 million. In
addition, lower adjusted earnings from operations in the third
quarter of fiscal 2020 reflected $10.8
million of additional stock compensation expenses compared
to the corresponding period a year ago. The adoption of IFRS 16
positively impacted earnings from operations by $0.9 million due to the implied finance costs
recorded on lease obligations.
Depreciation and amortization expense was $16.4 million in the third quarter of fiscal
2020, compared to $10.2 million a
year ago. The increase primarily reflected incremental amortization
of acquisition-related intangible assets due to the acquisitions of
KMW, Comecer and iXLOG and $4.0
million of incremental depreciation of right-of-use assets
as a result of the adoption of IFRS 16.
EBITDA was $26.8 million (7%
EBITDA margin) in the third quarter of fiscal 2020 compared to
$48.7 million (15% EBITDA margin) in
the third quarter of fiscal 2019. Lower EBITDA reflected
$18.8 million of restructuring
charges, inefficiencies from the implementation of the
Reorganization Plan, which negatively impacted earnings by
approximately $5.0 million, and
$10.8 million of additional stock
compensation expenses. These increased expenses were partially
offset by higher revenues and lower operating lease costs related
to the adoption of IFRS 16, which positively impacted EBITDA by
$4.9 million.
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. For the three
and nine months ended December 29,
2019, the adoption of IFRS 16 resulted in increased
depreciation expenses related to right-of-use assets of
$4.0 million and $11.6 million, respectively, 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 and
$2.7 million for the three and nine
months ended December 29, 2019,
respectively, with corresponding decreases in operating lease
costs. The combined impact of these changes was to increase
earnings from operations by $0.9
million and $2.7 million and
to increase EBITDA by $4.9 million
and $14.3 million for the three and
nine months ended December 29, 2019,
respectively. The impact on net income was negligible.
Order Backlog Continuity
(In millions of dollars)
|
Three
Months
|
Three
Months
|
Nine
Months
|
Nine
Months
|
|
Ended
|
Ended
|
Ended
|
Ended
|
|
December
29,
|
December
30,
|
December
29,
|
December
30,
|
|
2019
|
2018
|
2019
|
2018
|
Opening Order
Backlog
|
$
|
945
|
$
|
830
|
$
|
904
|
$
|
746
|
Revenues
|
(367)
|
(321)
|
(1,048)
|
(905)
|
Order
Bookings
|
368
|
397
|
1,112
|
1,109
|
Order Backlog
adjustments1
|
(7)
|
20
|
(29)
|
(24)
|
Total
|
$
|
939
|
$
|
926
|
$
|
939
|
$
|
926
|
1 Order Backlog adjustments include
incremental Order Backlog of $4 million acquired with MARCO,
foreign exchange adjustments and cancellations.
|
Order Bookings
Third quarter fiscal 2020 Order
Bookings were $368 million, a 7%
decrease compared to the third quarter of fiscal 2019. Excluding
Business Acquisitions, third quarter Order Bookings were
$314 million, which excludes the
$32 million joint ATS and Comecer
Order Booking for a new pharmaceutical customer. By market, Order
Bookings in the life sciences and consumer products markets
decreased due primarily to timing of customer decisions. Order
Bookings in the transportation and energy markets were similar to
the third quarter last year.
Order Backlog
At December 29,
2019, Order Backlog was $939
million, 1% higher than at December
30, 2018. Order Backlog growth was primarily driven by Order
Backlog from acquired businesses.
BUSINESS ACQUISITIONS:
MARCO Limited
On December 16,
2019, the Company acquired 100% of the shares of MARCO
Limited ("MARCO"), a U.K. based 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 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. The food industry is attractive because
it is subject to industry and government regulations, driving a
need for high precision technologies.
Cash consideration paid in the third quarter of fiscal 2020 was
$44.4 million (25.2 million U.K.
pounds sterling). Additional contingent consideration of up to
$12.8 million (7.3 million U.K.
pounds sterling) is payable if certain performance targets are met
within two years of the acquisition date. The fair value of the
contingent consideration was valued at $7.4
million (4.2 million U.K. pounds sterling) at the
acquisition date.
This acquisition was accounted for as a business combination with
the Company as the acquirer of MARCO. The purchase method of
accounting was used and the earnings were consolidated from the
acquisition date, December 16,
2019.
Quarterly Conference Call
ATS' quarterly conference
call begins at 10:00 a.m. eastern on
Wednesday, February 5, 2020, 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 February 12,
2020) by dialing (416) 849-0833 and entering passcode
5498745 followed by the number sign.
About ATS
ATS is an industry-leading automation
solutions provider to many of the world's most successful
companies. ATS uses its extensive knowledge base and global
capabilities in custom automation, repeat automation, automation
products and value-added services, including pre-automation and
after-sales services, to address the sophisticated manufacturing
automation systems and service needs of multinational customers in
markets such as life sciences, chemicals, consumer products,
electronics, food, beverage, transportation, energy, and oil and
gas. Founded in 1978, ATS employs approximately 4,500 people at 24
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 December 29, 2019
This Management's Discussion and Analysis ("MD&A") for
the three and nine months ended December 29,
2019 (third quarter of fiscal 2020) is as of February 4, 2020 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 third 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 third 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 and right-of-use 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 nine-month periods ended December 29, 2019 and December 30, 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 nine-month periods ending December 29, 2019 and December 30, 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, chemicals, consumer products,
electronics, food, beverage, transportation, energy, and oil and
gas. Founded in 1978, ATS employs approximately 4,500 people at 24
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: aligning 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
|
Nine
Months
|
Nine
Months
|
|
Ended
|
Ended
|
Ended
|
Ended
|
|
December
29,
|
December
30,
|
December
29,
|
December
30,
|
Revenues by
market
|
2019
|
2018
|
2019
|
2018
|
Life
sciences
|
$
|
207.5
|
$
|
156.6
|
$
|
570.4
|
$
|
415.4
|
Transportation
|
104.2
|
80.8
|
268.8
|
220.0
|
Consumer
products
|
32.5
|
46.2
|
131.5
|
164.1
|
Energy
|
23.0
|
37.8
|
76.9
|
105.5
|
Total
revenues
|
$
|
367.2
|
$
|
321.4
|
$
|
1,047.6
|
$
|
905.0
|
Fiscal 2020 third quarter revenues were 14% higher than in the
corresponding period a year ago and included $31.3 million of revenues earned by acquired
companies (see "Business Acquisitions"). Excluding acquired
companies, third quarter revenues were $335.9 million, a 5% increase compared to the
corresponding period a year ago, primarily reflecting Order
Backlog, which, excluding the impact of acquired Order Backlog, was
4% higher entering the third quarter of fiscal 2020 compared to a
year ago. Revenues generated from construction contracts and
services increased 17% and 3%, respectively, compared to the
corresponding period a year ago.
By market, revenues generated in life sciences increased 33% due
to higher Order Backlog entering the third quarter of fiscal 2020
primarily due to additional revenues for medical device and
radiopharmaceutical applications. Revenues in the transportation
market increased 29% due to higher Order Backlog for both electric
vehicle and internal combustion engine projects entering the third
quarter of fiscal 2020. Revenues from consumer products decreased
30% due primarily to lower activity in warehousing automation.
Revenues from energy markets decreased 39%, due to timing of
project performance, primarily in the nuclear market.
Year-to-date
Revenues for the nine months ended
December 29, 2019 were $1,047.6 million, 16% higher than in the
corresponding period a year ago and included $82.9 million of revenues earned by acquired
companies. Excluding acquired companies, revenues for the nine
months ended December 29, 2019 were
$964.7 million, a 7% increase over
the corresponding period a year ago, primarily reflecting higher
Order Backlog entering fiscal 2020 compared to a year ago. Revenues
generated from construction contracts and services both increased
by 13% compared to the corresponding period a year
ago.
By market, fiscal 2020 year-to-date revenues from life sciences
markets increased 37%, primarily reflecting higher Order Backlog
entering fiscal 2020 due to increased revenues for medical device,
pharmaceutical and radiopharmaceutical applications. Revenues in
the transportation market increased 22% due to higher Order Backlog
entering fiscal 2020, primarily for electric vehicle projects.
Consumer products revenues decreased 20% compared to a year ago due
primarily to lower activity in warehouse automation. Revenues from
energy markets decreased 27%, compared to a year ago primarily due
to lower Order Backlog for nuclear projects entering fiscal
2020.
Consolidated Operating Results
(In millions of
dollars)
|
Three
Months
|
Three
Months
|
Nine
Months
|
Nine
Months
|
|
Ended
|
Ended
|
Ended
|
Ended
|
|
December
29,
|
December
30,
|
December
29,
|
December
30,
|
|
2019
|
2018
|
2019
|
2018
|
Earnings from
operations
|
$
|
10.4
|
$
|
38.5
|
$
|
70.7
|
$
|
84.5
|
Amortization of
acquisition-related intangible assets
|
6.9
|
5.5
|
25.1
|
16.5
|
Restructuring
charges
|
18.8
|
––
|
20.8
|
––
|
Acquisition-related
transaction costs
|
1.4
|
2.7
|
1.4
|
3.6
|
Adjusted earnings
from operations1
|
$
|
37.5
|
$
|
46.7
|
$
|
118.0
|
$
|
104.6
|
1 See
"Notice to Reader: Non-IFRS Measures and Additional IFRS
Measures."
|
|
Three
Months
|
Three
Months
|
Nine
Months
|
Nine
Months
|
|
Ended
|
Ended
|
Ended
|
Ended
|
|
December
29,
|
December
30,
|
December
29,
|
December
30,
|
|
2019
|
2018
|
2019
|
2018
|
Earnings from
operations
|
$
|
10.4
|
$
|
38.5
|
$
|
70.7
|
$
|
84.5
|
Depreciation and
amortization
|
16.4
|
10.2
|
53.1
|
30.1
|
EBITDA1
|
$
|
26.8
|
$
|
48.7
|
$
|
123.8
|
$
|
114.6
|
1 See
"Notice to Reader: Non-IFRS Measures and Additional IFRS
Measures."
|
Third Quarter
Fiscal 2020 third quarter earnings from
operations were $10.4 million (3%
operating margin) compared to $38.5
million (12% operating margin) in the third quarter of
fiscal 2019. Third quarter fiscal 2020 earnings from operations
included $18.8 million of
restructuring charges incurred as part of the Company's
reorganization plan (see "Reorganization Plan"), $1.4 million of incremental costs related to the
Company's acquisition activity, down from $2.7 million in the comparable period a year ago,
and $6.9 million related to
amortization of acquisition-related intangible assets, up from
$5.5 million of amortization of
acquisition-related intangible assets in the comparable period a
year ago.
Excluding these items in both quarters, third quarter fiscal
2020 adjusted earnings from operations were $37.5 million (10% margin), compared to adjusted
earnings from operations of $46.7
million (15% margin) a year ago. As expected, third quarter
fiscal 2020 adjusted earnings from operations reflected a lower
gross margin due to inefficiencies from the implementation of the
Reorganization Plan, which negatively impacted earnings by
approximately $5.0 million. In
addition, lower adjusted earnings from operations in the third
quarter of fiscal 2020 reflected $10.8
million of additional stock compensation expenses compared
to the corresponding period a year ago. The adoption of IFRS 16
positively impacted earnings from operations by $0.9 million due to the implied finance costs
recorded on lease obligations.
Depreciation and amortization expense was $16.4 million in the third quarter of fiscal
2020, compared to $10.2 million a
year ago. The increase primarily reflected incremental amortization
of acquisition-related intangible assets due to the acquisitions of
KMW, Comecer and iXLOG and $4.0
million of incremental depreciation of right-of-use assets
as a result of the adoption of IFRS 16.
EBITDA was $26.8 million (7%
EBITDA margin) in the third quarter of fiscal 2020 compared to
$48.7 million (15% EBITDA margin) in
the third quarter of fiscal 2019. Lower EBITDA reflected
$18.8 million of restructuring
charges, inefficiencies from the implementation of the
Reorganization Plan, which negatively impacted earnings by
approximately $5.0 million, and
$10.8 million of additional stock
compensation expenses. These increased expenses were partially
offset by higher revenues and lower operating lease costs related
to the adoption of IFRS 16, which positively impacted EBITDA by
$4.9 million.
Year-to-date
For the nine months ended December 29, 2019, earnings from operations were
$70.7 million (7% operating margin)
compared to $84.5 million (9%
operating margin) in the corresponding period a year ago. Excluding
$20.8 million of restructuring costs,
$1.4 million of incremental costs
related to the Company's acquisition activity, and $25.1 million related to amortization of
identifiable intangible assets recorded on business acquisitions,
adjusted earnings from operations were $118.0 million (11% operating margin) in the
first nine months of fiscal 2020, compared to adjusted earnings
from operations of $104.6 million
(12% operating margin) in the corresponding period a year ago.
Higher adjusted earnings from operations primarily reflected higher
revenues in the first nine months of fiscal 2020, partially offset
by increased selling, general and administrative expenses and stock
compensation expenses. The adoption of IFRS 16 positively impacted
earnings from operations by $2.7
million due to the implied finance costs recorded on lease
obligations.
Depreciation and amortization expense was $53.1 million in the first nine months of fiscal
2020 compared to $30.1 million a year
ago. The increase primarily reflected amortization of
acquisition-related intangible assets of KMW, Comecer and iXLOG and
$11.6 million of incremental
depreciation of right-of-use assets as a result of the adoption of
IFRS 16.
Year-to-date fiscal 2020 EBITDA was $123.8 million (12% EBITDA margin) compared to
$114.6 million (13% EBITDA margin) in
the first nine months of fiscal 2019. Higher EBITDA reflected
increased revenues, partially offset by lower gross margin,
inefficiencies from the implementation of the Reorganization Plan,
increased stock compensation expenses and higher selling, general
and administrative expenses. Higher selling, general and
administrative expenses in the period were partially offset by
$14.3 million less of operating lease
expenses related to the adoption of IFRS 16.
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. For the three
and nine months ended December 29,
2019, the adoption of IFRS 16 resulted in increased
depreciation expenses related to right-of-use assets of
$4.0 million and $11.6 million, respectively, 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 and
$2.7 million for the three and nine
months ended December 29, 2019,
respectively, with corresponding decreases in operating lease
costs. The combined impact of these changes was to increase
earnings from operations by $0.9
million and $2.7 million and
to increase EBITDA by $4.9 million
and $14.3 million for the three and
nine months ended December 29, 2019,
respectively. The impact on net income was negligible. See
"Accounting Standard Adopted in Fiscal 2020."
Order Bookings by Quarter
Third quarter fiscal 2020
Order Bookings were $368 million, a
7% decrease compared to the third quarter of fiscal 2019. Excluding
Business Acquisitions, third quarter Order Bookings were
$314 million, which excludes the
$32 million joint ATS and Comecer
Order Booking for a new pharmaceutical customer. By market, Order
Bookings in the life sciences and consumer products markets
decreased due primarily to timing of customer decisions. Order
Bookings in the transportation and energy markets were similar to
the third quarter last year.
Order Backlog Continuity
(In millions of dollars)
|
Three
Months
|
Three
Months
|
Nine
Months
|
Nine
Months
|
|
Ended
|
Ended
|
Ended
|
Ended
|
|
December
29,
|
December
30,
|
December
29,
|
December
30,
|
|
2019
|
2018
|
2019
|
2018
|
Opening Order
Backlog
|
$
|
945
|
$
|
830
|
$
|
904
|
$
|
746
|
Revenues
|
(367)
|
(321)
|
(1,048)
|
(905)
|
Order
Bookings
|
368
|
397
|
1,112
|
1,109
|
Order Backlog
adjustments1
|
(7)
|
20
|
(29)
|
(24)
|
Total
|
$
|
939
|
$
|
926
|
$
|
939
|
$
|
926
|
1 Order Backlog adjustments include
incremental Order Backlog of $4 million acquired with MARCO,
foreign exchange adjustments and cancellations.
|
Order Backlog by Market
(In millions of dollars)
|
December
29,
|
December
30,
|
As
at
|
2019
|
2018
|
Life
sciences
|
$
|
514
|
$
|
473
|
Transportation
|
262
|
275
|
Consumer
products
|
69
|
88
|
Energy
|
94
|
90
|
Total
|
$
|
939
|
$
|
926
|
At December 29, 2019, Order
Backlog was $939 million, 1% higher
than at December 30, 2018. Order
Backlog growth was primarily driven by Order Backlog from acquired
businesses.
Reorganization Plan
ATS previously announced the
investment of capital in targeted high-performing facilities
globally, as part of a $60 million
plan to increase capacity and address the Company's significant
Order Backlog. To drive continued improvement in operations and
focus investment in strategic growth areas of the business, the
Company initiated a reorganization plan in the third quarter of
fiscal 2020. The reorganization plan includes the consolidation of
certain operations and the closure of some underperforming
facilities and small branch offices – none of which are
strategically important to future growth. Costs to implement the
restructuring are comprised primarily of severances and lease
termination costs. The Company has recorded charges of $2.0 million and $18.8
million in the second and third quarters, respectively, with
approximately $6.0 million expected
to be recorded in the fourth quarter. In addition, operating
margins were negatively impacted by approximately $5 million in the third quarter, with a similar
impact expected in the fourth quarter, due primarily to unabsorbed
costs from closing facilities and cost inefficiencies from
transferring projects. Certain of the Company's foreign operations
have engaged in normal course consultation processes regarding the
reorganization plan. As a result of the expected improvements in
the Company's cost structure and elimination of unprofitable
facilities, commencing in fiscal 2021, management expects
annualized improvements to operating earnings of approximately
$15 million to $18 million, and operating margins to be
positively impacted by approximately 110 basis points to 130 basis
points based on the Company's trailing twelve month revenues.
Outlook
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 that could affect the
Company and, where necessary 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 improved ATS' customer
offerings in both pharmaceuticals and radiopharmaceuticals, as
demonstrated by the $32 million
dollar Order Booking for a pharmaceutical customer announced
in the third quarter. In transportation, some electric vehicle
opportunities have been delayed due to ongoing refinements to
customer technologies or continued assessments of end market
conditions; however, the funnel remains significant. 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 $939 million at
the end of the third 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 Company's Order Backlog includes several large enterprise
programs. These enterprise programs have longer periods of
performance and therefore longer revenue recognition cycles. In the
fourth quarter of fiscal 2020, management expects the conversion of
Order Backlog to revenues to be in the 35% to 40% range. The
ongoing implementation of the reorganization plan and project
schedules are expected to cause revenues to be in the lower end of
the 35% to 40% range of Order Backlog.
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. In the fourth quarter of fiscal 2020, the Company's
earnings from operations margins will continue to be negatively
impacted by the implementation of the Reorganization Plan.
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 now underway at several facilities.
To date, the Company has invested $38.3
million in property, plant and equipment and intangible
assets. 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.
BUSINESS ACQUISITIONS
MARCO Limited
On December 16,
2019, the Company acquired 100% of the shares of MARCO
Limited ("MARCO"), a U.K. based 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 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. The food industry is attractive because
it is subject to industry and government regulations, driving a
need for high precision technologies.
Cash consideration paid in the third quarter of fiscal 2020 was
$44.4 million (25.2 million U.K.
pounds sterling). Additional contingent consideration of up to
$12.8 million (7.3 million U.K.
pounds sterling) is payable if certain performance targets are met
within two years of the acquisition date. The fair value of the
contingent consideration was valued at $7.4
million (4.2 million U.K. pounds sterling) at the
acquisition date. This acquisition was accounted for as a
business combination with the Company as the acquirer of MARCO. The
purchase method of accounting was used and the earnings were
consolidated from the acquisition date, December 16, 2019.
iXLOG
On September 19,
2019, the Company acquired 100% of the shares of iXLOG
Unternehmensberatung GmbH ("iXLOG"), a Germany-based IT consulting and service
provider specializing in business process optimization, business
intelligence and analytics, primarily for large- and medium-sized
industrial manufacturing customers. The addition of iXLOG is highly
complementary to ATS' Process Automation Solutions ("PA") business.
iXLOG will play a critical role in expanding PA's data analytics
and business intelligence offerings and in building additional
solutions to broaden PA's digitization capabilities that are used
to optimize customer manufacturing operations.
The total purchase price was $10.6
million (7.2 million Euros).
Cash consideration paid in the second quarter was $7.7 million (5.2 million
Euros), with the balance related to an earn-out to be paid
within 20 months of the acquisition date. The cash consideration of
the purchase price, along with transaction costs, were funded with
existing cash on hand. The acquisition was accounted for as a
business combination with the Company as the acquirer of iXLOG. The
purchase method of accounting was used and the earnings of iXLOG
were consolidated from the acquisition date, September 19, 2019.
IAP BV
On October 31,
2019, the Company acquired 60% of the shares of Industrial
Automation Partners B.V. ("IAP"), a Netherlands-based provider of process
automation services to medium-sized international
companies.
The total purchase price paid in the third quarter of fiscal
2020 was $2.6 million (1,8 million Euros). This acquisition was
accounted for as a business combination with the Company as the
acquirer of IAP. The purchase method of accounting was used
and the earnings were consolidated from the acquisition date,
October 31, 2019.
CONSOLIDATED RESULTS
(In millions of dollars, except
per share data)
|
Three
Months
|
Three
Months
|
Nine
Months
|
Nine
Months
|
|
Ended
|
Ended
|
Ended
|
Ended
|
|
December
29,
|
December
30,
|
December
29,
|
December
30,
|
|
2019
|
2018
|
2019
|
2018
|
Revenues
|
$
|
367.2
|
$
|
321.4
|
$
|
1,047.6
|
$
|
905.0
|
Cost of
revenues
|
275.0
|
236.8
|
774.2
|
668.8
|
Selling, general and
administrative
|
58.5
|
52.4
|
174.7
|
148.0
|
Restructuring
costs
|
18.8
|
––
|
20.8
|
––
|
Stock-based
compensation
|
4.5
|
(6.3)
|
7.2
|
3.7
|
Earnings from
operations
|
$
|
10.4
|
$
|
38.5
|
$
|
70.7
|
$
|
84.5
|
Net finance
costs
|
$
|
6.5
|
$
|
4.8
|
$
|
20.3
|
$
|
15.1
|
Provision for income
taxes
|
(0.2)
|
8.6
|
10.5
|
16.8
|
Net
income
|
$
|
4.1
|
$
|
25.1
|
$
|
39.9
|
$
|
52.6
|
Basic and diluted
earnings per share
|
$
|
0.04
|
$
|
0.27
|
$
|
0.43
|
$
|
0.56
|
Revenues. At $367.2
million, consolidated revenues for the third quarter of
fiscal 2020 were $45.8 million, or
14%, higher than in the corresponding period a year ago. At
$1,047.6 million, year-to-date
consolidated revenues were $142.6
million, or 16%, higher than in the corresponding period a
year ago (see "Overview – operating results").
Cost of revenues. At $275.0
million, third quarter fiscal 2020 cost of revenues
increased compared to the corresponding period a year ago by
$38.2 million, or 16%, primarily due
to higher revenues. Year-to-date cost of revenues of $774.2 million increased $105.4 million, or 16%, primarily due to higher
revenues. Gross margin was 25%, compared to 26% in the
corresponding period a year ago, due to the negative impact of the
Company's reorganization plan (see "Reorganization Plan").
Year-to-date gross margins for the nine-month periods ended
December 29, 2019 and December 30, 2018 were 26%.
Selling, general and administrative ("SG&A")
expenses. SG&A expenses for the third quarter of fiscal
2020 were $58.5 million, which
included $6.9 million of costs
related to the amortization of identifiable intangible assets on
business acquisitions and $1.4
million of incremental costs related to the Company's
acquisition activity. Excluding these costs, SG&A expenses were
$50.2 million in the third quarter of
fiscal 2020. Comparably, SG&A expenses for the third quarter of
fiscal 2019 were $44.2 million, which
excluded $5.5 million of costs
related to the amortization of identifiable intangible assets
recorded on business acquisitions and $2.7
million of acquisition-related transaction costs. Higher
SG&A expenses in the third quarter of fiscal 2020 primarily
reflected the additions of KMW, Comecer, and iXLOG, and
increased employee costs.
For the nine months ended December 29,
2019, SG&A expenses were $174.7
million, which included $25.1
million of expenses related to the amortization of
identifiable intangible assets on business acquisitions and
$1.4 million of incremental costs
related to the Company's acquisition activity. Excluding these
costs, SG&A expenses were $148.2
million for the nine months ended December 29, 2019. Comparably, SG&A expenses
for the nine months ended December 30,
2018 were $127.9 million,
which excluded $16.5 million of
expenses related to the amortization of identifiable intangible
assets on business acquisitions and $3.6
million of acquisition-related transaction costs. Higher
SG&A expenses in the first nine months of fiscal 2020 primarily
reflected the additions of KMW, Comecer, and iXLOG, and increased
sales-related expenses.
Restructuring costs. For the three- and nine-month
periods ended December 29, 2019,
restructuring costs were $18.8
million and $20.8 million,
respectively, compared to restructuring costs of $nil in the
corresponding periods a year ago (see "Reorganization Plan").
Stock-based compensation. Stock-based compensation
expense amounted to $4.5 million in
the third quarter of fiscal 2020 compared to a recovery of
$6.3 million in the corresponding
period a year ago. For the nine-month period ended December 29, 2019, stock-based compensation
expense increased to $7.2 million,
compared to $3.7 million a year
earlier. 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
nine-month periods ended December 29,
2019, earnings from operations were $10.4 million (3% operating margin) and
$70.7 million (7% operating margin),
respectively, compared to earnings from operations of $38.5 million (12% operating margin) and
$84.5 million (9% operating margin)
in the corresponding periods a year ago. Excluding the impact of
adoption of IFRS 16, earnings from operations were $9.5 million (3% operating margin) and
$68.0 million (6% operating margin)
for the three- and nine-month periods ended December 29, 2019, respectively (see "Overview –
operating results").
Net finance costs. Net finance costs were
$6.5 million in the third quarter of
fiscal 2020, compared to $4.8 million
a year ago. For the nine months ended December 29, 2019, finance costs were
$20.3 million compared to
$15.1 million in the corresponding
period a year ago. For the three and nine months ended December 29, 2019, the increase was primarily due
to additional interest expense of $0.9
million and $2.7 million,
respectively, recorded on lease liabilities on the adoption of IFRS
16, and lower interest income compared to the corresponding period
a year ago.
Income tax provision. For the three and nine months ended
December 29, 2019, the Company's
effective income tax rates of -4% and 21%, respectively, differed
from the combined Canadian basic federal and provincial income tax
rate of 27% primarily due to losses in certain jurisdictions with
different statutory tax rates, primarily as a result of the
Reorganization Plan.
Net income. Fiscal 2020 third quarter net income was
$4.1 million (4 cents per share basic and diluted) compared to
$25.1 million of net income
(27 cents per share basic and
diluted) for the third quarter of fiscal 2019. Adjusted basic
earnings per share were 26 cents in
the third quarter of fiscal 2020 compared to 33 cents in the third quarter of fiscal 2019 (see
"Reconciliation of non-IFRS measures to IFRS measures").
Net income for the nine months ended December 29, 2019 was $39.9 million (43
cents per share basic and diluted) compared to $52.6 million (56
cents per share basic and diluted) for the corresponding
period a year ago. Adjusted basic earnings per share were
80 cents in the nine months ended
December 29, 2019 compared to
72 cents in the corresponding period
a year ago (see "Reconciliation of non-IFRS measures to IFRS
measures").
Reconciliation of Non-IFRS Measures to IFRS
Measures
(In millions of dollars, except per share data)
The following table reconciles EBITDA to the most directly
comparable IFRS measure (net income):
|
Three
Months
|
Three
Months
|
Nine
Months
|
Nine
Months
|
|
Ended
|
Ended
|
Ended
|
Ended
|
|
December
29,
|
December
30,
|
December
29,
|
December
30,
|
|
2019
|
2018
|
2019
|
2018
|
EBITDA
|
$
|
26.8
|
$
|
48.7
|
$
|
123.8
|
$
|
114.6
|
Less: depreciation
and amortization expense
|
16.4
|
10.2
|
53.1
|
30.1
|
Earnings from
operations
|
$
|
10.4
|
$
|
38.5
|
$
|
70.7
|
$
|
84.5
|
Less: net finance
costs
|
6.5
|
4.8
|
20.3
|
15.1
|
Provision for income
taxes
|
(0.2)
|
8.6
|
10.5
|
16.8
|
Net
income
|
$
|
4.1
|
$
|
25.1
|
$
|
39.9
|
$
|
52.6
|
The following table reconciles adjusted earnings from operations
and adjusted basic earnings per share to the most directly
comparable IFRS measure (net income and basic earnings per
share):
|
Three Months Ended
December 29, 2019
|
Three Months Ended
December 30, 2018
|
|
IFRS
|
Adjustments
|
Adjusted
|
IFRS
|
Adjustments
|
Adjusted
|
|
|
|
(non-IFRS)
|
|
|
(non-IFRS)
|
Earnings from
operations
|
$
|
10.4
|
$
|
––
|
$
|
10.4
|
$
|
38.5
|
$
|
––
|
$
|
38.5
|
Acquisition-related
transaction costs
|
––
|
1.4
|
1.4
|
––
|
2.7
|
2.7
|
Amortization of
acquisition-
|
|
|
|
|
|
|
related intangible
assets
|
––
|
6.9
|
6.9
|
––
|
5.5
|
5.5
|
Restructuring
costs
|
––
|
18.8
|
18.8
|
––
|
––
|
––
|
|
$
|
10.4
|
$
|
27.1
|
$
|
37.5
|
$
|
38.5
|
$
|
8.2
|
$
|
46.7
|
Less: net finance
costs
|
$
|
6.5
|
$
|
––
|
$
|
6.5
|
$
|
4.8
|
$
|
––
|
$
|
4.8
|
Income before
income taxes
|
$
|
3.9
|
$
|
27.1
|
$
|
31.0
|
$
|
33.7
|
$
|
8.2
|
$
|
41.9
|
Provision for income
taxes
|
$
|
(0.2)
|
$
|
––
|
$
|
(0.2)
|
$
|
8.6
|
$
|
––
|
$
|
8.6
|
Adjustment to
provision for
|
|
|
|
|
|
|
income
taxes1
|
––
|
7.5
|
7.5
|
––
|
2.2
|
2.2
|
|
$
|
(0.2)
|
$
|
7.5
|
$
|
7.3
|
$
|
8.6
|
$
|
2.2
|
$
|
10.8
|
Net
income
|
$
|
4.1
|
$
|
19.6
|
$
|
23.7
|
$
|
25.1
|
$
|
6.0
|
$
|
31.1
|
Basic earnings per
share
|
$
|
0.04
|
$
|
0.22
|
$
|
0.26
|
$
|
0.27
|
$
|
0.06
|
$
|
0.33
|
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.
|
|
Nine Months Ended
December 29, 2019
|
Nine Months Ended
December 30, 2018
|
|
IFRS
|
Adjustments
|
Adjusted
|
IFRS
|
Adjustments
|
Adjusted
|
|
|
|
(non-IFRS)
|
|
|
(non-IFRS)
|
Earnings from
operations
|
$
|
70.7
|
$
|
––
|
$
|
70.7
|
$
|
84.5
|
$
|
––
|
$
|
84.5
|
Acquisition-related
transaction costs
|
––
|
1.4
|
1.4
|
––
|
3.6
|
3.6
|
Amortization of
acquisition-
|
|
|
|
|
|
|
related intangible
assets
|
––
|
25.1
|
25.1
|
––
|
16.5
|
16.5
|
Restructuring
costs
|
––
|
20.8
|
20.8
|
––
|
––
|
––
|
|
$
|
70.7
|
$
|
47.3
|
$
|
118.0
|
$
|
84.5
|
$
|
20.1
|
$
|
104.6
|
Less: net finance
costs
|
$
|
20.3
|
$
|
––
|
$
|
20.3
|
$
|
15.1
|
$
|
––
|
$
|
15.1
|
Income before
income taxes
|
$
|
50.4
|
$
|
47.3
|
$
|
97.7
|
$
|
69.4
|
$
|
20.1
|
$
|
89.5
|
Provision for income
taxes
|
$
|
10.5
|
$
|
––
|
$
|
10.5
|
$
|
16.8
|
$
|
––
|
$
|
16.8
|
Adjustment to
provision for
|
|
|
|
|
|
|
income
taxes1
|
––
|
13.0
|
13.0
|
––
|
5.4
|
5.4
|
|
$
|
10.5
|
$
|
13.0
|
$
|
23.5
|
$
|
16.8
|
$
|
5.4
|
$
|
22.2
|
Net
income
|
$
|
39.9
|
$
|
34.3
|
$
|
74.2
|
$
|
52.6
|
$
|
14.7
|
$
|
67.3
|
Basic earnings per
share
|
$
|
0.43
|
$
|
0.37
|
$
|
0.80
|
$
|
0.56
|
$
|
0.16
|
$
|
0.72
|
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
|
December 29,
2019
|
March 31,
2019
|
Cash and cash
equivalents
|
$
117.7
|
$
224.5
|
Debt-to-equity
ratio1
|
0.50:1
|
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.
|
|
Three
Months
|
Three
Months
|
Nine
Months
|
Nine
Months
|
|
Ended
|
Ended
|
Ended
|
Ended
|
|
December
29,
|
December
30,
|
December
29,
|
December
30,
|
|
2019
|
2018
|
2019
|
2018
|
Cash flows (used in)
provided by operating activities
|
$
|
(7.0)
|
$
|
62.2
|
$
|
10.6
|
$
|
101.3
|
At December 29, 2019, the Company
had cash and cash equivalents of $117.7
million compared to $224.5
million at March 31, 2019. At
December 29, 2019, the Company's
debt-to-total equity ratio was 0.50:1 and reflected increased lease
liabilities due to the adoption of IFRS 16.
In the third quarter of fiscal 2020, cash flows used in
operating activities were $7.0
million ($62.2 million
provided by operating activities in the third quarter a year ago).
The decrease in operating cash flows related primarily to the
timing of investments in non-cash working capital in certain
customer programs. In the nine months ended December 29, 2019, cash flows provided by
operating activities were $10.6
million ($101.3 million
provided by operating activities in the corresponding period a year
ago). The decrease in operating cash flows related primarily
to the timing of investments in non-cash working capital in certain
customer programs.
In the third quarter of fiscal 2020, the Company's investment in
non-cash working capital increased by $27.3
million from September 29,
2019. On a year-to-date basis, investment in non-cash
working capital increased $92.2
million. Accounts receivable increased 20%, or $42.9 million and net contracts in progress
increased 86%, or $45.0 million,
compared to March 31, 2019, due to
increased revenue and the timing of billings on certain customer
contracts. 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 $11.2
million, primarily due to an increase in work-in-process on
certain customer projects. Deposits and prepaid assets decreased
6%, or $1.6 million, compared to
March 31, 2019 due to the timing of
program execution. Accounts payable and accrued liabilities
increased 4%, or $9.3 million,
compared to March 31, 2019.
Provisions increased 123%, or $17.2
million, compared to March 31,
2019, due to provisions related to the Company's
Reorganization Plan.
Cash investments in property, plant and equipment totalled
$30.2 million in the first nine
months of fiscal 2020, primarily related to the acquisition of
computer hardware, office equipment, and the expansion and
improvement of certain manufacturing facilities.
Intangible assets expenditures were $8.0
million for the first nine months of fiscal 2020, and
primarily related to computer software and various internal
development projects.
At December 29, 2019, the Company
had $647.5 million of unutilized
multipurpose credit, including letters of credit, available under
existing credit facilities and an additional $9.2 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 of the Company's subsidiaries. Certain of the Company's
subsidiaries also provide guarantees under the Credit Facility. At
December 29, 2019, the Company had
utilized $128.6 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 U.K. 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 December 29,
2019, all of the covenants were met.
The Company has additional credit facilities available of
$31.4 million (11.0 million Euros, $10.0
million U.S., 50.0 million Thai
baht and 2.0 million Czech koruna). The total amount
outstanding on these facilities at December
29, 2019 was $4.4 million, of
which $4.2 million was classified as
bank indebtedness (March 31, 2019 -
$2.0 million) and $0.2 million was classified as long-term debt
(March 31, 2019 - $18.6 million). The interest rates applicable to
the credit facilities range from 1.88% to 6.25% 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 December 29, 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:
|
Purchase
|
|
obligations
|
Less than one
year
|
$
|
145.2
|
One – two
years
|
1.2
|
Two – three
years
|
0.2
|
Three – four
years
|
0.2
|
Four – five
years
|
0.1
|
|
$
|
146.9
|
The Company's off-balance sheet arrangements consist of purchase
obligations comprised 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 December 29, 2019, the total value of outstanding
letters of credit was approximately $194.3
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 nine months of fiscal 2020, 368,927 stock
options were exercised. At February 4,
2020 the total number of shares outstanding was 92,277,723
and there were 1,318,130 stock options outstanding to acquire
common shares of the Company.
NORMAL COURSE ISSUER BID
On December 19, 2019, 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 5,134,930 common shares,
representing approximately 10% of the public float of 51,349,307
common shares of the Company. As at December
16, 2019, there were 92,196,223 common shares of the Company
issued and outstanding.
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 ATS common shares when ATS would not
ordinarily be active in the market due to internal trading blackout
periods, insider trading rules, or otherwise.
The NCIB follows the Company's normal course issuer bid for the
12 months ended December 4, 2019 (the
"2019 NCIB"). The Company purchased 2,509,738 common shares for
$39.3 million under the 2019 NCIB.
The weighted average price per share repurchased was $15.66. 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 nine 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
|
|
Nine Months
Ended
|
|
|
December
29,
|
December
30,
|
|
December
29,
|
December
30,
|
|
|
2019
|
2018
|
% change
|
2019
|
2018
|
% change
|
U.S.
dollar
|
1.321
|
1.322
|
(0.1%)
|
1.327
|
1.307
|
1.5%
|
Euro
|
1.462
|
1.508
|
(3.1%)
|
1.478
|
1.521
|
(2.8%)
|
CONSOLIDATED QUARTERLY RESULTS
(In millions of
dollars, except per share amounts)
|
Q3
|
Q2
|
Q1
|
Q4
|
Q3
|
Q2
|
Q1
|
Q4
|
|
2020
|
2020
|
2020
|
2019
|
2019
|
2019
|
2019
|
2018
|
|
|
|
|
|
|
|
|
|
Revenues
|
$
|
367.2
|
$
|
341.2
|
$
|
339.2
|
$
|
348.6
|
$
|
321.4
|
$
|
283.6
|
$
|
300.0
|
$
|
298.4
|
|
|
|
|
|
|
|
|
|
Earnings from
operations
|
$
|
10.4
|
$
|
31.7
|
$
|
28.6
|
$
|
30.3
|
$
|
38.5
|
$
|
19.0
|
$
|
27.0
|
$
|
25.5
|
|
|
|
|
|
|
|
|
|
Adjusted earnings
from
|
|
|
|
|
|
|
|
|
operations
|
$
|
37.5
|
$
|
42.5
|
$
|
38.0
|
$
|
38.2
|
$
|
46.7
|
$
|
25.4
|
$
|
32.6
|
$
|
32.8
|
|
|
|
|
|
|
|
|
|
Net income
|
$
|
4.1
|
$
|
19.3
|
$
|
16.4
|
$
|
18.2
|
$
|
25.1
|
$
|
10.8
|
$
|
16.7
|
$
|
15.0
|
Basic and diluted
earnings
|
|
|
|
|
|
|
|
|
per share
|
$
|
0.04
|
$
|
0.21
|
$
|
0.18
|
$
|
0.20
|
$
|
0.27
|
$
|
0.11
|
$
|
0.18
|
$
|
0.16
|
|
|
|
|
|
|
|
|
|
Adjusted basic
earnings per
|
|
|
|
|
|
|
|
|
share1
|
$
|
0.26
|
$
|
0.29
|
$
|
0.25
|
$
|
0.26
|
$
|
0.33
|
$
|
0.17
|
$
|
0.22
|
$
|
0.22
|
|
|
|
|
|
|
|
|
|
Order
Bookings2
|
$
|
368.0
|
$
|
321.0
|
$
|
423.0
|
$
|
298.0
|
$
|
397.0
|
$
|
355.0
|
$
|
358.0
|
$
|
348.0
|
|
|
|
|
|
|
|
|
|
Order
Backlog3
|
$
|
939.0
|
$
|
945.0
|
$
|
982.0
|
$
|
904.0
|
$
|
926.0
|
$
|
830.0
|
$
|
789.0
|
$
|
746.0
|
1 Non-IFRS measure. 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" and
"Order Bookings by Quarter."
|
3 Non-IFRS measure. See "Notice
to reader: Non-IFRS measures and additional IFRS measures" and
"Order Backlog Continuity."
|
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 with its Order Bookings,
revenues and earnings from operations due to employee vacation time
and summer plant shutdowns by its customers.
CRITICAL ACCOUNTING ESTIMATES AND ASSUMPTIONS
The
preparation of the Company's interim condensed consolidated
financial statements requires management to make estimates,
judgments and assumptions that affect the reported amounts of
assets, liabilities, revenues and expenses, and the disclosure of
contingent assets and liabilities at the end of the reporting
period. Uncertainty about these estimates, judgments and
assumptions could result in outcomes that require a material
adjustment to the carrying amount of the asset or liability
affected in future periods.
The Company based its assumptions on information available when
the interim condensed consolidated financial statements were
prepared. Existing circumstances and assumptions about future
developments may change due to market changes or circumstances
arising beyond the control of the Company. Such changes are
reflected in the estimates as they occur. There have been no
material changes to the critical accounting estimates described in
the Company's 2019 MD&A.
ACCOUNTING STANDARD ADOPTED IN 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 12 months or less) and
leases of low-value assets. In applying IFRS 16, the Company
recognized ROU assets and lease liabilities in the interim
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 in operating activities) in the
interim 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:
- Used 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 12 months of 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 and 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 assets; (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- and nine-month periods ended December 29, 2019, the Company recognized expense
related to short-term, and low-value leases of $0.7 million and $2.4
million, respectively, in cost of revenues, and $0.4 million and $1.1
million, respectively, 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 judgment 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 and nine months ended December 29, 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 and MARCO on
December 16, 2019. Management has not
fully completed its review of internal controls over financial
reporting for these newly acquired organizations. Since the
acquisitions 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 December 29, 2019.
(millions of
dollars)
|
Comecer
|
MARCO
|
Revenue1
|
73.11
|
0.52
|
Net income
(loss)1
|
(5.0)1
|
0.22
|
Current
assets3
|
63.9
|
7.7
|
Non-current
assets3
|
177.0
|
46.7
|
Current
liabilities3
|
49.2
|
11.3
|
Non-current
liabilities3
|
111.9
|
25.7
|
1 Results
from April 1, 2019 to December 29, 2019, including amortization of
acquisition-related intangible assets.
|
2 Results
from December 16, 2019 to December 29, 2019.
|
3 Interim consolidated statement of
financial position as at December 29, 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; the
Company's strategy to expand organically and through acquisition;
the ATS Business Model ("ABM"); a reorganization plan, including
expectations in relation to restructuring costs, near-term impact
on operating margins, and improvements to operating earnings and
operating margins; trade negotiations and disputes; conversion of
opportunities into Order Bookings; the Company's Order Backlog
partially mitigating the impact of volatile 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;
rate of Order Backlog conversion; expected benefits with respect to
the Company's efforts to expand its services revenues; the expected
impact of the ABM; initiatives having the goal of expanding
adjusted earnings from operations margin over long-term; the
reorganization plan's impact on earnings from operations margins in
the fourth quarter; 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;
expected contribution of MARCO and iXLOG; 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; inability to successfully expand
organically or through acquisition, due to an inability to grow
expertise, personnel, and/or facilities at required rates or to
identify, negotiate and conclude one or more acquisitions, or to
raise, through debt or equity, or otherwise have available,
required capital; that acquisitions made are not integrated as
quickly or effectively as planned or expected and, as a result,
anticipated benefits and synergies are not realized; that the
reorganization plan is not implemented as anticipated, takes longer
than anticipated, and/or does not achieve the anticipated benefits,
resulting in delays, increased costs, and/or lower than expected
improvements to operating performance; 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 impact of the ABM 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; that the reorganization plan's impact on
earnings from operations margins during the fourth quarter is other
than expected; 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 MARCO's
and/or iXLOG's impact is other than expected; 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)
|
|
December
29
|
March 31
|
As at
|
Note
|
2019
|
2019
|
|
|
|
|
ASSETS
|
|
|
|
Current
assets
|
11
|
|
|
Cash and cash
equivalents
|
|
$
|
117,748
|
$
|
224,540
|
Accounts
receivable
|
|
260,097
|
217,245
|
Income tax
receivable
|
|
3,935
|
4,938
|
Contract
assets
|
17
|
226,150
|
213,553
|
Inventories
|
5
|
79,207
|
67,998
|
Deposits, prepaids
and other assets
|
6
|
27,111
|
28,719
|
|
|
714,248
|
756,993
|
Non-current
assets
|
|
|
|
Property, plant and
equipment
|
|
121,412
|
97,669
|
Right-of-use
assets
|
7
|
57,971
|
––
|
Other
assets
|
8
|
2,502
|
2,446
|
Goodwill
|
|
595,484
|
551,643
|
Intangible
assets
|
|
191,563
|
213,945
|
Deferred income tax
assets
|
|
3,404
|
3,194
|
Investment tax credit
receivable
|
|
65,890
|
62,953
|
|
|
1,038,226
|
931,850
|
Total
assets
|
|
$
|
1,752,474
|
$
|
1,688,843
|
|
|
|
|
LIABILITIES AND
EQUITY
|
|
|
|
Current
liabilities
|
|
|
|
Bank
indebtedness
|
11
|
$
|
4,167
|
$
|
1,950
|
Accounts payable and
accrued liabilities
|
|
263,574
|
254,227
|
Income tax
payable
|
|
685
|
7,721
|
Contract
liabilities
|
17
|
128,776
|
161,139
|
Provisions
|
10
|
31,093
|
13,943
|
Current portion of
lease liabilities
|
7
|
13,935
|
––
|
Current portion of
long-term debt
|
11
|
133
|
18,550
|
|
|
442,363
|
457,530
|
Non-current
liabilities
|
|
|
|
Employee
benefits
|
|
27,030
|
28,187
|
Long-term lease
liabilities
|
7
|
45,358
|
––
|
Long-term
debt
|
11
|
322,660
|
328,247
|
Deferred income tax
liabilities
|
|
85,254
|
78,585
|
Other long-term
liabilities
|
8
|
2,426
|
6,663
|
|
|
482,728
|
441,682
|
Total
liabilities
|
|
$
|
925,091
|
$
|
899,212
|
|
|
|
|
Commitments and
contingencies
|
11, 15
|
|
|
|
|
|
|
EQUITY
|
|
|
|
Share
capital
|
12
|
$
|
521,474
|
$
|
516,613
|
Contributed
surplus
|
|
11,685
|
11,709
|
Accumulated other
comprehensive income
|
|
62,074
|
69,549
|
Retained
earnings
|
|
230,992
|
191,449
|
Equity attributable
to shareholders
|
|
826,225
|
789,320
|
Non-controlling
interests
|
|
1,158
|
311
|
Total
equity
|
|
827,383
|
789,631
|
Total liabilities
and equity
|
|
$
|
1,752,474
|
$
|
1,688,843
|
ATS AUTOMATION TOOLING SYSTEMS
INC.
Interim Consolidated Statements of Income
(in
thousands of Canadian dollars, except per share amounts -
unaudited)
|
|
Three months
ended
|
Nine months
ended
|
|
|
December
29
|
December
30
|
December
29
|
December
30
|
|
Note
|
2019
|
2018
|
2019
|
2018
|
|
|
|
|
|
|
Revenues
|
|
|
|
|
|
Revenues from
construction contracts
|
|
$
|
228,901
|
$
|
195,441
|
$
|
626,960
|
$
|
554,002
|
Sale of
goods
|
|
29,925
|
21,038
|
94,905
|
62,804
|
Services
rendered
|
|
108,359
|
104,918
|
325,778
|
288,194
|
|
|
|
|
|
|
Total
revenues
|
16, 17
|
367,185
|
321,397
|
1,047,643
|
905,000
|
|
|
|
|
|
|
Operating costs
and expenses
|
|
|
|
|
|
Cost of
revenues
|
|
274,985
|
236,836
|
774,224
|
668,848
|
Selling, general and
administrative
|
|
58,508
|
52,408
|
174,748
|
147,978
|
Restructuring
costs
|
10
|
18,797
|
––
|
20,773
|
––
|
Stock-based
compensation
|
14
|
4,544
|
(6,310)
|
7,221
|
3,692
|
|
|
|
|
|
|
Earnings from
operations
|
|
10,351
|
38,463
|
70,677
|
84,482
|
|
|
|
|
|
|
Net finance
costs
|
18
|
6,440
|
4,761
|
20,294
|
15,084
|
|
|
|
|
|
|
Income before
income taxes
|
|
3,911
|
33,702
|
50,383
|
69,398
|
|
|
|
|
|
|
Income tax expense
(recovery)
|
13
|
(162)
|
8,601
|
10,527
|
16,836
|
|
|
|
|
|
|
Net
income
|
|
$
|
4,073
|
$
|
25,101
|
$
|
39,856
|
$
|
52,562
|
|
|
|
|
|
|
Attributable
to
|
|
|
|
|
|
Shareholders
|
|
$
|
3,983
|
$
|
25,094
|
$
|
39,764
|
$
|
52,544
|
Non-controlling
interests
|
|
90
|
7
|
92
|
18
|
|
|
$
|
4,073
|
$
|
25,101
|
$
|
39,856
|
$
|
52,562
|
Earnings per
share
|
|
|
|
|
|
attributable to
shareholders
|
|
|
|
|
|
Basic and
diluted
|
19
|
$
|
0.04
|
$
|
0.27
|
$
|
0.43
|
$
|
0.56
|
ATS AUTOMATION TOOLING SYSTEMS
INC.
Interim Consolidated Statements of Comprehensive
Income
(in thousands of Canadian dollars - unaudited)
|
Three months
ended
|
|
Nine months
ended
|
|
|
December
29
|
|
December
30
|
|
December
29
|
|
December
30
|
|
|
2019
|
|
2018
|
|
2019
|
|
2018
|
|
|
|
|
|
|
|
|
|
Net income
|
$
|
4,073
|
$
|
25,101
|
$
|
39,856
|
$
|
52,562
|
|
|
|
|
|
|
|
|
|
Other comprehensive
income (loss):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Items to be
reclassified subsequently to net income:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Currency translation
adjustment
|
|
|
|
|
|
|
|
|
(net of income taxes
of $nil)
|
|
3,452
|
|
9,476
|
|
(9,087)
|
|
(6,473)
|
|
|
|
|
|
|
|
|
|
Net unrealized gain
(loss) on derivative financial
|
|
|
|
|
|
|
|
|
instruments designated
as cash flow hedges
|
|
1,258
|
|
(5,257)
|
|
3,375
|
|
(1,594)
|
Tax impact
|
|
(315)
|
|
1,316
|
|
(849)
|
|
399
|
|
|
|
|
|
|
|
|
|
Gain transferred to
net income for derivatives
|
|
|
|
|
|
|
|
|
designated as cash
flow hedges
|
|
(470)
|
|
(815)
|
|
(1,283)
|
|
(773)
|
Tax impact
|
|
118
|
|
213
|
|
327
|
|
208
|
|
|
|
|
|
|
|
|
|
Cash flow hedge
reserve adjustment
|
|
(2,426)
|
|
13,012
|
|
56
|
|
13,822
|
Tax impact
|
|
607
|
|
(3,254)
|
|
(14)
|
|
(3,456)
|
|
|
|
|
|
|
|
|
|
Other
comprehensive income (loss)
|
|
2,224
|
|
14,691
|
|
(7,475)
|
|
2,133
|
|
|
|
|
|
|
|
|
|
Comprehensive
income
|
$
|
6,297
|
$
|
39,792
|
$
|
32,381
|
$
|
54,695
|
|
|
|
|
|
|
|
|
|
Attributable
to
|
|
|
|
|
|
|
|
|
Shareholders
|
$
|
6,207
|
$
|
39,785
|
$
|
32,289
|
$
|
54,677
|
Non-controlling
interests
|
|
90
|
|
7
|
|
92
|
|
18
|
|
$
|
6,297
|
$
|
39,792
|
$
|
32,381
|
$
|
54,695
|
ATS AUTOMATION TOOLING SYSTEMS INC.
Interim
Consolidated Statements of Changes in Equity
(in thousands
of Canadian dollars - unaudited)
Nine months ended
December 29, 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
|
|
––
|
|
––
|
|
39,764
|
|
––
|
|
––
|
|
––
|
|
92
|
|
39,856
|
Other comprehensive
income
(loss)
|
|
––
|
|
––
|
|
––
|
|
(9,087)
|
|
1,612
|
|
(7,475)
|
|
––
|
|
(7,475)
|
Total comprehensive
income (loss)
|
|
––
|
|
––
|
|
39,764
|
|
(9,087)
|
|
1,612
|
|
(7,475)
|
|
92
|
|
32,381
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-controlling
interest (note
4)
|
|
––
|
|
––
|
|
––
|
|
––
|
|
––
|
|
––
|
|
755
|
|
755
|
Stock-based
compensation
|
|
––
|
|
696
|
|
––
|
|
––
|
|
––
|
|
––
|
|
––
|
|
696
|
Exercise of stock
options
|
|
4,871
|
|
(720)
|
|
––
|
|
––
|
|
––
|
|
––
|
|
––
|
|
4,151
|
Repurchase of common
shares (note 12)
|
|
(10)
|
|
––
|
|
––
|
|
––
|
|
––
|
|
––
|
|
––
|
|
(10)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance, as at
December 29,
2019
|
$
|
521,474
|
$
|
11,685
|
$
|
230,992
|
$
|
58,686
|
$
|
3,388
|
$
|
62,074
|
$
|
1,158
|
$
|
827,383
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Nine months ended
December 30, 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
|
|
––
|
|
––
|
|
52,544
|
|
––
|
|
––
|
|
––
|
|
18
|
|
52,562
|
Other comprehensive
income (loss)
|
|
––
|
|
––
|
|
––
|
|
(6,473)
|
|
8,606
|
|
2,133
|
|
––
|
|
2,133
|
Total comprehensive
income
(loss)
|
|
––
|
|
––
|
|
52,544
|
|
(6,473)
|
|
8,606
|
|
2,133
|
|
18
|
|
54,695
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stock-based
compensation
|
|
––
|
|
729
|
|
––
|
|
––
|
|
––
|
|
––
|
|
––
|
|
729
|
Exercise of stock
options
|
|
2,315
|
|
(492)
|
|
––
|
|
––
|
|
––
|
|
––
|
|
––
|
|
1,823
|
Repurchase of common
shares
|
|
(14,775)
|
|
––
|
|
––
|
|
––
|
|
––
|
|
––
|
|
––
|
|
(14,775)
|
Balance, as at
December 30,
2018
|
$
|
536,287
|
$
|
12,772
|
$
|
173,913
|
$
|
73,445
|
$
|
4,518
|
$
|
77,963
|
$
|
310
|
$
|
801,245
|
ATS AUTOMATION TOOLING SYSTEMS INC.
Interim
Consolidated Statements of Cash Flows
(in thousands of
Canadian dollars - unaudited)
|
|
|
Three months
ended
|
|
Nine months
ended
|
|
|
|
December
29
|
|
December
30
|
|
December
29
|
|
December
30
|
|
Note
|
|
2019
|
|
2018
|
|
2019
|
|
2018
|
Operating
activities
|
|
|
|
|
|
|
|
|
|
Net income
|
|
$
|
4,073
|
$
|
25,101
|
$
|
39,856
|
$
|
52,562
|
Items not involving
cash
|
|
|
|
|
|
|
|
|
|
Depreciation of
property, plant and equipment
|
|
|
3,785
|
|
2,988
|
|
10,838
|
|
8,756
|
Amortization of
right-of-use assets
|
7
|
|
4,030
|
|
––
|
|
11,615
|
|
––
|
Amortization of
intangible assets
|
|
|
8,608
|
|
7,246
|
|
30,681
|
|
21,302
|
Deferred income
taxes
|
13
|
|
(2,489)
|
|
4,564
|
|
2,844
|
|
4,664
|
Other items not
involving cash
|
|
|
(2,121)
|
|
(2,932)
|
|
(163)
|
|
(5,365)
|
Stock-based
compensation
|
14
|
|
4,544
|
|
(6,310)
|
|
7,221
|
|
3,692
|
|
|
|
20,430
|
|
30,657
|
|
102,892
|
|
85,611
|
Change in non-cash
operating working capital
|
|
|
(27,381)
|
|
31,577
|
|
(92,268)
|
|
15,736
|
Cash flows
provided by (used in)
|
|
|
|
|
|
|
|
|
|
operating
activities
|
|
$
|
(6,951)
|
$
|
62,234
|
$
|
10,624
|
$
|
101,347
|
|
|
|
|
|
|
|
|
|
|
Investing
activities
|
|
|
|
|
|
|
|
|
|
Acquisition of
property, plant and equipment
|
|
$
|
(13,718)
|
$
|
(4,019)
|
$
|
(30,237)
|
$
|
(13,417)
|
Acquisition of
intangible assets
|
|
|
(2,007)
|
|
(11,672)
|
|
(8,014)
|
|
(14,633)
|
Business
acquisitions, net of cash acquired
|
4
|
|
(46,701)
|
|
(24,279)
|
|
(53,367)
|
|
(24,279)
|
Proceeds from
disposal of property,
|
|
|
|
|
|
|
|
|
|
plant and
equipment
|
|
|
9
|
|
5,046
|
|
82
|
|
5,196
|
Cash flows used in
investing activities
|
|
$
|
(62,417)
|
$
|
(34,924)
|
$
|
(91,536)
|
$
|
(47,133)
|
|
|
|
|
|
|
|
|
|
|
Financing
activities
|
|
|
|
|
|
|
|
|
|
Bank
indebtedness
|
|
$
|
986
|
$
|
198
|
$
|
2,345
|
$
|
(1,111)
|
Repayment of
long-term debt
|
|
|
(53)
|
|
(28)
|
|
(17,057)
|
|
(320)
|
Proceeds from
long-term debt
|
|
|
111
|
|
38
|
|
177
|
|
76
|
Proceeds from
exercise of stock options
|
|
|
1,877
|
|
51
|
|
4,151
|
|
1,823
|
Repurchase of common
shares
|
|
|
(10)
|
|
(14,775)
|
|
(10)
|
|
(14,775)
|
Lease
payments
|
|
|
(6,190)
|
|
––
|
|
(13,098)
|
|
––
|
Cash flows used in
financing activities
|
|
$
|
(3,279)
|
$
|
(14,516)
|
$
|
(23,492)
|
$
|
(14,307)
|
|
|
|
|
|
|
|
|
|
|
Effect of exchange
rate changes on cash
|
|
|
|
|
|
|
|
|
|
and cash
equivalents
|
|
|
(258)
|
|
7,068
|
|
(2,388)
|
|
4,035
|
|
|
|
|
|
|
|
|
|
|
Increase (decrease)
in cash and cash equivalents
|
|
|
(72,905)
|
|
19,862
|
|
(106,792)
|
|
43,942
|
|
|
|
|
|
|
|
|
|
|
Cash and cash
equivalents, beginning of period
|
|
|
190,653
|
|
354,228
|
|
224,540
|
|
330,148
|
|
|
|
|
|
|
|
|
|
|
Cash and cash
equivalents, end of period
|
|
$
|
117,748
|
$
|
374,090
|
$
|
117,748
|
$
|
374,090
|
|
|
|
|
|
|
|
|
|
|
Supplemental
information
|
|
|
|
|
|
|
|
|
|
Cash income taxes
paid
|
|
$
|
5,686
|
$
|
1,575
|
$
|
8,411
|
$
|
6,355
|
Cash interest
paid
|
|
$
|
12,210
|
$
|
11,090
|
$
|
27,140
|
$
|
24,027
|
SOURCE ATS Automation Tooling Systems Inc.