Release Date: August 08, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- ATS Corp (ATS, Financial) reported its second highest bookings quarter in company history, with order bookings reaching $817 million, up 18% year-over-year.
- The life sciences backlog reached $990 million, the highest in ATS history, marking a 26% increase compared to Q1 last year.
- The acquisition of Paxiom is expected to create further opportunities in multiple end market verticals, particularly in food and beverage.
- ATS Corp (ATS) launched a service experience center in Cambridge, enhancing real-time asset monitoring and support capabilities.
- The company continues to see strong demand for its digital offerings, including AI-based predictive maintenance solutions, which improve productivity and energy management.
Negative Points
- Q1 revenues were $694 million, down 8% from the previous year, primarily due to lower transportation revenues.
- The transportation backlog decreased, and the company announced plans to realign its EV businesses, reflecting expectations for EV to be a smaller portion of its overall business.
- Q1 adjusted earnings from operations were $86 million, down 16% from the previous year, due to lower revenues.
- The company is experiencing cost increases on some material costs, despite improvements in supply chain lead times.
- ATS Corp (ATS) expects lower revenues in Q2, particularly in the transportation business, which will negatively impact margins.
Q & A Highlights
Q: Can you explain the increase in working capital and whether there's a risk of obsolescence with the equipment being built, especially given the evolving EV outlook?
A: Ryan McLeod, CFO: The increase in working capital is primarily due to life sciences and EV sectors. It's largely a timing issue, and we expect to collect on these as programs progress. We don't anticipate obsolescence risk as we are building according to contractual expectations.
Q: Could you elaborate on the opportunities in energy, including larger nuclear reactors, SMRs, and grid battery storage?
A: Andrew Hider, CEO: Our main focus is on CANDU reactor refurbishment, which is a niche area for us. We also see growth potential in small modular reactors (SMRs) and continue to support decommissioning and energy storage, which are areas of opportunity for ATS.
Q: How do recent investments in GLP-1 supply chains align with your expectations for the segment?
A: Andrew Hider, CEO: The investments are in line with our expectations. We have a strong presence in the auto-injector market and continue to support customers with our Symphoni platform, which enhances production efficiency.
Q: What factors influence the revenue range for the upcoming quarter, and how do you expect margins to perform?
A: Ryan McLeod, CFO: The revenue range depends on project progress and material availability. We expect margin pressure due to lower revenues, but we are implementing cost containment measures and restructuring to mitigate this.
Q: Can you provide details on the Heidolph acquisition and the nature of your M&A pipeline?
A: Ryan McLeod, CFO: The Heidolph acquisition is accretive on a gross margin basis. It was an asset deal due to the company's insolvency process, making it an attractive opportunity. Our M&A pipeline includes a mix of small, medium, and large opportunities.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
