ATS Reports Second Quarter Fiscal 2013 Results
ATS Automation Posted 11/07/2012CAMBRIDGE, ON - ATS Automation Tooling Systems Inc. (TSX: ATA) ("ATS" or the "Company") today reported financial results for the three and six months ended September 30, 2012 for its continuing operations (Automation Systems Group or "ASG") and discontinued operations ("Solar").
Second Quarter Summary
- Revenues from continuing operations were $141.4 million, 3% lower than the corresponding period a year ago primarily because certain transportation programs (representing approximately 10% of Order Backlog) were put on hold by the customers due to product and specification revisions. The programs have since been re-started;
- Despite the decline in revenues, earnings from continuing operations for the second quarter of fiscal 2012 increased 4% to $13.8 million (10% operating margin) compared to $13.3 million (9% operating margin) in the corresponding period a year ago;
- EBITDA increased 3% to $16.7 million (12% EBITDA margin) from $16.2 million (11% EBITDA margin) in the corresponding period a year ago;
- Order Bookings decreased 32% to $112 million from $165 million in the second quarter of fiscal 2012, reflecting customer delays in the transportation market, and lower activity in energy, consumer products & electronics. Period end Order Backlog was $361 million, similar to $363 million a year ago;
- Included in Order Bookings is an initial deposit of $12 million on an approximately 65 million Euro contract awarded to ATS to provide turnkey automation to a large, life sciences project in Nigeria, for which ATS is the prime equipment contractor. The balance of the contract will be recorded in Order Bookings at financial close. See "ASG Order Bookings"
- The Company's balance sheet was strong with cash net of debt of $102.5 million. Subsequent to the end of the second quarter, the Company established a new $250 million credit facility, which provides improved terms and flexibility over the previous credit facility; and
- Subsequent to the second quarter, the Company signed a definitive agreement to sell four ground-mount solar projects, representing approximately 34 megawatts ("MWs"). Net proceeds to the Company are expected to be approximately $20 million. See "Second Quarter Summary of Discontinued Operations: Solar".
By industrial market, revenues from life sciences increased 20% year over year due to higher Order Backlog entering the second quarter compared to a year ago. Consumer products & electronics revenues declined 9% year over year due to lower Order Bookings. Energy market revenues decreased 59% on lower Order Backlog entering the second quarter compared to a year ago, reflecting reduced activity primarily in the solar market. Despite increased Order Backlog entering the second quarter compared to a year ago, transportation revenues declined 3% due to customer delays on certain programs.
Foreign exchange rate changes negatively impacted the translation of revenues earned by foreign-based ASG subsidiaries by approximately $3.6 million compared to the second quarter of fiscal 2012, primarily reflecting the strengthening of the Canadian dollar relative to the Euro.
Fiscal 2013 second quarter earnings from operations were $13.8 million (10% operating margin) compared to earnings from operations of $13.3 million (9% operating margin) in the second quarter of fiscal 2012. Growth in earnings from operations primarily reflected improved program management and improvements made in supply chain management to reduce third-party costs. The increase in earnings from operations was partially offset by lower revenues earned during the period.
ASG Order Bookings
Second quarter fiscal 2013 Order Bookings were $112 million, 32% lower than a year ago reflecting customer delays in the transportation market, and lower activity in energy, consumer products & electronics.
Included in second quarter Order Bookings is an initial down payment of $12 million in relation to an approximately 65 million Euro contract awarded to ATS for the turnkey supply of equipment and automation to produce medical devices in a new production facility in Nigeria. ATS is the prime contractor on the project which involves five ATS divisions and six major subcontractors in Germany, Switzerland and Austria. The balance of the agreement with ATS is subject to a number of conditions. In particular, the agreement is conditional on ATS satisfying itself with respect to certain technical and product information and with respect to certain commercial matters, including finalization of project financing and export credit guarantees relating to the customer's project, which are expected to be provided by German and Austrian banks and export credit agencies. The program is currently expected to begin late in the third quarter of fiscal 2013 with financial close expected in the first quarter of fiscal 2014. The majority of activity on the program is expected to occur subsequent to financial close, with most of the project delivered in fiscal 2014. The program is being undertaken with the sponsorship and collaboration of the Rivers State Government, Nigeria. The Company will record the balance of the Order Booking and Order Backlog when financial close is reached.
Second Quarter Summary of Discontinued Operations: Solar
Solar results for the first and second quarters of fiscal 2013 included those of Ontario Solar only as a result of the de-consolidation of Photowatt International S.A.S. ("PWF") during fiscal 2012.
Ontario Solar generated revenues of $0.6 million in the second quarter of fiscal 2013 due to decreased market activity resulting primarily from regulatory delays in project approvals. Ontario Solar recorded a $1.8 million loss on lower-than-planned revenues combined with higher fixed costs.
Regarding Ontario Solar, subsequent to the end of the second quarter, Ontario Solar's 50% owned joint venture, Ontario Solar PV Fields ("OSPV") signed a definitive agreement to sell four ground-mount solar projects, representing approximately 34 MWs. The transaction is subject to a number of approvals and conditions, including the purchaser securing financing for the projects. The Company expects the transaction to close in early calendar 2013. OSPV will retain 25% ownership of the projects until the projects reach commercial operation, which is expected to happen in the second half of calendar 2013. Net proceeds to the Company are expected to be approximately $20 million, which is expected to be paid out through calendar 2013, based on the projects achieving certain development milestones.
The Company intends to complete the separation of Solar via the divestment of the remaining projects owned by OSPV and the Ontario Solar manufacturing operations. The value to be derived from the sale of the remaining solar assets is unknown. The Company is continuing to work with interested parties to conclude agreements.
Quarterly Conference Call
ATS's quarterly conference call begins at 10 am eastern on Wednesday November 7 and can be accessed live at www.atsautomation.com or on the phone by dialing 416 644 3416 five minutes prior.
ATS Automation provides innovative, custom designed, built and installed manufacturing solutions to many of the world's most successful companies. Founded in 1978, ATS uses its industry-leading knowledge and global capabilities to serve the sophisticated automation systems' needs of multinational customers in industries such as consumer products & electronics, energy, life sciences and transportation. It also leverages its many years of experience and skills to fulfill the specialized automation product manufacturing requirements of customers. Through its Ontario solar business, ATS participates in the solar energy industry. ATS employs approximately 2,400 people at 20 manufacturing facilities in Canada, the United States, 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.