ATS Q1 2024 Earnings Call Transcript

Quartr
Provided by Quartr
August 9, 2023

There are 9 speakers on the call.

Operator

Welcome to the ATS Corporation First Quarter Conference Call and Webcast. This call is being recorded on August 9, 2023 at 8:30 am Eastern Time. Following the presentation, we will conduct a question and answer session. Instructions will be provided at that time for you to queue up for questions. At any time.

Operator

I'll now turn the call over to David Galison, Head of Investor Relations at ATS.

Speaker 1

20. Thank you, operator, and good morning, everyone. On the call today are Andrew Hyder, Chief Executive Officer of ATS and Ryan McLeod, Chief Financial Officer. Please note that our remarks today are accompanied by a slide deck, which can be viewed via our webcast and available at atsaautomation.com. We caution that the statements made on the webcast and conference call may contain forward looking information and our cautionary statement regarding such information, including the material factors that could cause actual results to differ materially from the statements and the material factors or assumptions applied in making the statements are detailed on Slide 2 of the slide deck.

Speaker 1

Now it's my pleasure to turn the

Speaker 2

call over to Andrew. 20. Thank you, David. Good morning, ladies and gentlemen, and thank you for joining us. This has been an exciting and transformational few months for ATS, which we successfully completed our U.

Speaker 2

S. IPO and New York Stock Exchange listing. This represents an important milestone and supports our strategic growth objectives, while providing increased liquidity in our shares and additional flexibility for M and A. Today, we reported a strong start to fiscal 2024, including record revenues supported by solid bookings, 2019. These results reflect our team's disciplined execution of the ATS business model.

Speaker 2

2019. Our ABM has reached a level of maturity that allows us to refine our approach and add new tools to drive performance 2019 for our customers and shareholders. First, I will update you on the business and Ryan will provide his financial report. Starting with our financial value drivers. Order bookings for the quarter were $690,000,000 and included growth in Life Sciences and continued strength in EV and Food and Beverage.

Speaker 2

2018. Q1 revenues were a record $754,000,000 up 23% from Q1 last year, including strong organic growth. Adjusted earnings from operations in Q1 were $102,000,000 up 29% versus Q1 last year. Moving to our outlook. We ended the quarter with order backlog of over 2 $1,000,000,000 This was anchored by our strong bookings in Life Sciences, partially offset by the expected revenue ramp up on our EV projects an execution of primary processing projects ahead of the harvest season in food and beverage.

Speaker 2

As a reminder, 2019. The timing of customer decisions on larger opportunities can cause variability in order bookings from quarter to quarter. 2019. By market, Life Sciences backlog was $783,000,000 Of note, Our Q1 bookings included several key wins in strategic submarkets, including contact lenses, auto injectors and diabetes care along with pharma and radiopharma. We secured another significant order based on our Symphony, our innovative high speed assembly technology.

Speaker 2

Overall, 2019. The life sciences funnel for fiscal 2024 remains strong. Transportation ending backlog was 834,000,000 up 124% year over year as we continue to execute on our current EV programs. 2019. Our existing programs are being executed well and are on track from a cost and timing perspective.

Speaker 2

Because of the strategic nature of EV program and large order values, this can cause variability in bookings. 20. That said, our transportation funnel remains strong and we remain well positioned given our significant experience and expertise in this space. 2018. In Food and Beverage, quarterly bookings were solid and the ending backlog was 188,000,000 up 15% year over year even as our teams delivered on projects in backlog ahead of the tomato harvest season.

Speaker 2

2019. Our funnel remains strong. Timing of the summer harvest season drives some seasonality in this vertical. At Energy, the nuclear market continues to provide long term opportunities, including new public sector interest. The focus on clean, sustainable energy to support future settled needs, including grid requirements for electric vehicles is a driver for our business as is the adoption of carbon reduction targets.

Speaker 2

ATS is well positioned to support in several areas as customers add and refurbish nuclear power plants and commercialize small modular reactors. We also have specialized skills in energy storage and continue to work with customers on select opportunities. In Consumer Products, 2019. Our backlog and funnel are stable. However, inflationary pressures continue to have an effect on discretionary spending in the Personal Care markets, which may impact timing of some customer investments.

Speaker 2

On digital, to create real value out of production digitization. Our customers are looking for a partner who is strong in both automation integration and domain knowledge. Our teams are helping customers understand how to capture data and more importantly, how to extract value from that data to drive impact. For example, a major global customer utilizing our IoT platform for plant performance management recently awarded us with a global management services contract 20.5 percent for digital services. Another life sciences customer recently launched a pilot with us for a global IoT platform for performance management.

Speaker 2

On after sales services, we are actively engaged with customers as we leverage both technology and services provide a better customer experience and outcome. For example, our enhanced remote support platform streamlines the process of contacting ATS support simply by scanning a QR code. With one customer, this ease of contact has led to an annual remote service contract leveraging the technology and our subject matter experts. Also, on after sales services, our regional networks and service centers are training and onboarding new resources to support our customers in critical geographic regions. The recent acquisition of Triad provides extended capabilities to support customers with predictive maintenance.

Speaker 2

On supply chain, material costs and lead time pressures remain and will take time to work through some of our larger projects. 2023. We have started to see some improvements in both pricing and lead times in certain areas. Countermeasures that were created 2019. Our ATS business model or ABM playbook continues to create a competitive advantage.

Speaker 2

2018. During the quarter, we completed 45 ABM events across all business groups and geographies. We use our ABM tools to drive improvements 2019. In all aspects of our business, not just on the shop floor. The ABM itself is also subject to continuous improvement.

Speaker 2

We constantly challenge ourselves on ABM tools and events to drive impact and stay focused on our value drivers. 2018. I'm pleased that our ABM is evolving and improving with time and use. In June, We hosted our annual ATS Leadership Conference. The theme was building the best ATS 20.

Speaker 2

We'll see examples of the ABM in action across our decentralized business as we drive value for our employees, customers and shareholders. On M and A, we recently announced and closed 2 acquisitions, Yazoom in Q1 and Odysee validation consultants in early Q2. Both are part of our Process Automation Group and enhance our capabilities in AI process optimization and digital services. Our M and A funnel remains active and healthy. And with our recent equity offering and listing on the NYSE, we have the balance sheet and financial capacity to move quickly should a potential opportunity meet our strict acquisition criteria.

Speaker 2

2019. On sustainability, ATS recently earned a bronze medal from EcoVartis, one of the world's leading providers of business sustainability ratings. This award speaks to our ongoing commitment to improve sustainability within ATS and leverage our solutions to help customers achieve their sustainability goals. 2019. Our teams are working closely with our global customers to meet their needs through energy efficient automation and energy management solutions.

Speaker 2

We are actively monitoring regulatory developments, including international reporting standards and more specific regional requirements. We look forward to releasing our next sustainability report later this year. On innovation, 20. When customers visit our sites where our innovations are displayed, their enthusiasm is clear. In particular, our patented Symphony technology, OnView in our ATS Innovation Centre in Cambridge, Ontario 2019.

Speaker 2

It's a good example of our investment in leading edge technology with applications across life sciences in addition to other possible market applications that we will explore in the future. A few other innovation highlights from the quarter. Our Comecera team Launched its Micros machine for dispensing microfluid drops of radioisotopes used in the preparation of radiopharmaceuticals and built on its contribution to automating the production of prostate cancer therapies. 2019. Our SP team has developed its EZ2 Vionic automated evaporator for integration into automated chemistry lines, which enables the production of pharmaceuticals that use new approaches to delivering drugs to target cells within a patient.

Speaker 2

Finally, our ATS Innovation Center developed a novel method for performing ultrasonic welding using our Symphony platform that we believe have a variety of applications. In summary, disciplined adherence to our build, 20. Our strong backlog and funnel give us confidence moving forward. With a focus on operational excellence. We will continue to build the best ATS for our employees, customers and shareholders.

Speaker 2

Now, I'll turn the call over to Ryan. Ryan, over to you.

Speaker 3

Thank you, Andrew, and good morning, everyone. This was a productive quarter for ATS that included solid and diversified bookings 20.5 percent and continued good execution across our business. Beginning with orders, bookings were $690,000,000 down 6.3% compared to Q1 last year, which included a US70 $1,000,000 BV order. Our trailing 12 month book to bill ratio at the end of the quarter was 1.18:one. In a broader context, 2019.

Speaker 3

Our Q1 results ranks among the 5 best quarters for order bookings in ATS' history. Moving to revenues, 2018. Q1 revenues were $754,000,000 up 23.4% over Q1 last year. Organic revenue growth was 15.4% year over year and was primarily due to increases in transportation related to EV battery projects. Recently acquired companies added approximately 3% to revenue growth and foreign exchange translation added a 5.5% benefit compared to Q1 last year.

Speaker 3

Our Q1 ending backlog of just over $2,000,000,000 was 30% higher than Q1 last year, providing good revenue visibility for the fiscal year. Our revenue conversion for Q2 is estimated to be in the 34% 20 27% range of backlog based on revenue expectations from existing backlog and new orders booked and build within the quarter. 2019. As a reminder, we do tend to experience seasonality in our business in the 2nd fiscal quarter due to seasonality in our food business and higher vacation periods 2018, and our European based businesses. Moving to earnings, Q1 adjusted earnings from operations were $102,100,000 up 29% from last year, primarily due to revenue growth.

Speaker 3

Adjusted earnings from operations margin was 13.5% in the quarter, up 58 basis points compared to last year, reflecting higher operating leverage, partially offset by lower gross margin. 2019. Our Q1 adjusted gross margin was 28.2%, down 50 basis points from Q1 last year. 2018. The year over year decrease primarily reflected the execution of higher margin programs in the prior period due in part to supply chain cost inflation 2020.

Speaker 3

In supply chain, we have seen improvement in specific cost categories such as raw materials and freight 2019. And cost inflation has stabilized. Despite some improvement, overall volatility remains in the supply chain environment. 2019. Lead times remain extended in key areas, primarily electrical control components, which impacts our ability to drive efficiency in our supply chain in the short term.

Speaker 3

2019. Our global supply chain teams are focused on countermeasures to help mitigate these challenges. Moving to SG and A, expenses were $11,500,000 higher than Q1 last year. This quarter's cost included $18,600,000 of acquisition related amortization $100,000 of acquisition related transaction costs. Excluding these comparable items in both periods, 2018.

Speaker 3

Q1's SG and A was $105,000,000 $13,500,000 higher than Q1 last year, primarily reflecting foreign exchange translation, 20.5 percent. Stock based compensation expense for Q1 was $10,000,000 an increase of $14,000,000 from last year's recovery of $4,000,000 Excluding the mark to market impact related to changes in our share price, Stock based compensation expense was $5,600,000 in Q1 compared to an expense of $4,300,000 last year. 20. Moving to the balance sheet. In Q1, cash flows used in operating activities were $107,800,000 primarily driven by an increase in working capital on our large EV programs.

Speaker 3

Non cash working capital as a 20.6 percent at the end of Q1, up from 10.1% at the end of Q4, primarily reflecting the timing of progress 2019 and milestone billings on our large EV programs. As I've noted previously, cash generation and period end working capital values can fluctuate depending on timing of billing milestone payments and execution of work on our larger programs. In the short term, we continue to expect working capital to remain variable and could exceed 15% in certain quarters as was the case in Q1. 2019. In the Q1 of fiscal 2024, total investments in CapEx and intangible assets were $23,000,000 20.

Speaker 3

This is in line with our expected fiscal 2024 CapEx spend of $80,000,000 to $100,000,000 which is supporting our organic growth. 2019. On leverage, our net debt to adjusted EBITDA ratio was 2.0:one as of the end of Q1, 20,000,000,000, down from 2.7 to 1 at the end of Q4 and in line with our target leverage range of 2 to 3 times net debt to adjusted EBITDA. 2019. Our lower sequential leverage reflects net proceeds from our recently completed equity offering that we've used to initially pay down amounts outstanding on our revolving senior secured line of credit.

Speaker 3

We ultimately intend to utilize capital from the offering to pursue strategic opportunities, including acquisitions. 20. As noted previously, we are willing to temporarily increase our leverage beyond our target leverage range to support short term working capital requirements 2019. For an acquisition that fits within our framework and creates long term value for our shareholders. In summary, 2019.

Speaker 3

ATS delivered solid results for the quarter, again highlighting the strength of our strategic end markets and the value of the ABM in driving disciplined execution across all parts of the business. Our teams remain focused on serving our customers and delivering value. Going forward, 20. We expect supply chain challenges will take some time to abate and we are continually driving existing and new countermeasures to address inflation and other persistent 2019. Strong order backlog supports our immediate growth plans.

Speaker 3

And with the additional financial flexibility gained from our recent U. S. IPO, 20. We have additional capacity to pursue organic and acquisition opportunities that meet our disciplined investment criteria and create value for our customers and shareholders. Now, we will open the call to questions from our analysts.

Speaker 2

20.

Operator

20. 20. The first question comes from Sheryl Lynn Radbourne of TD Cowen. Please go ahead.

Speaker 4

Good morning. This is Patrick Sullivan on behalf of Cherilyn Radbourne. Thank you for taking my questions. As it relates to bookings backlog in the 20. Transportation segment specifically.

Speaker 4

Previously, you'd mentioned a few ongoing pilot projects with new EV customers. Are you able to provide any updates with respect to those pilot projects and Whether or not there are indications for further follow on orders?

Speaker 2

Yes. Good morning, Patrick. So 20. We've talked about pilot and then going to production. I would say, we see the same as we've seen in the past where customers are aligning their solution set with the launch of EV vehicles and we do view the pilot moving to production whether it's 20.

Speaker 2

In the short term or long term, so I would say no change in the dynamic with customers around this taking from an identification to a solution set

Speaker 3

And Patrick, just as a reminder, these programs are typically longer in duration, so 12 to 18 months. So I mean, that kind of gives you a bit of a sense around when further opportunities could materialize.

Speaker 4

Okay, great. Thank you. Switching over to the topic of M and A. The most recent group of tuck ins seem to 2. We're building out the process automation platform further.

Speaker 4

1 in particular acquisition via Zoom, which you talked about springing more expertise in the areas of AI and ML. 20. Can you discuss how that those capabilities may be integrated across the larger process automation portfolio? And then whether or not there are other

Speaker 2

20. Absolutely. And Patrick, I'll take this in a bit of kind of answer your question as it was asked. So, Yazoom, 2020. Really pleased with this addition.

Speaker 2

And as a reminder, kind of to set the framework, our PA business Has really aligned itself with the ability to pull information and data from customer sites We've been continuing to build out and really enable this transition. And as a reminder, because ATS has a strong position in integration and 20. And automation and domain expertise, it really enables us to support our customers to drive actionable insights because 20. Customers look for just beyond a dashboard, how they can really improve their process to then improve their output. 2018.

Speaker 2

And so PA has really been enabling this and has positioned themselves as a strong leader in this space, Which then positions for more data analytics and more AI. And that's where Yazoom really comes in. And this business, We identified one of their AI based detections of anomalies in the data where it allows us to assess and do more predictive, so we can start to understand when things get out of sequence or out of spec and take action before the machine goes down. 20. And you're going to see PA and our total business continuing to build out capability around solution sets, around capabilities in this space, around 20.

Speaker 2

Specific actionable insights and we have launched PA Fax, which is a cloud based solution set where customers can now be part of. 20. If you step back ATS as a whole, we've made a shift to enabling our solutions, our products to be digitally enabled in the field, and we're continuing down that progress. If you then step back and look at AI within the business, 20. It's impacting every aspect of our business.

Speaker 2

And I can talk about it from a standpoint of how we operate utilizing AI where we're testing incoming products or parts. We can understand, are they having 20. Abnormalities where they started to get out of spec, so we can notify the supplier that they're having an issue. So not only Going to even our auditing process to identify where we might want to go deeper in auditing and really enabling our ability to 20. Maximize data, maximize the impact to then innovation and launch.

Speaker 2

And just a couple of examples, 20. We're very excited and one of them I'll highlight is our Raytech business and they have now they're working with 2 customers in Italy and have highlighted this at a trade show for Logistika, where they're now doing A 360 scan on peeled tomatoes. And the challenge here is not a defect in the tomato. That's usually something that's 20. Really easy to identify.

Speaker 2

They're looking actually for peel fragments where it might not have gotten all the peel off the tomato itself and then it will kick it off to reprocessing. And so it really enables them to become higher value to customers, higher on the quality change, higher on the impact 2020. And utilizing technology and innovation with AI to bring a full solution set to market. And so 20. It is certainly something that we're invested in, focused on and really maximizing the impact in the space that we have, but it's a really maturity.

Speaker 2

20. And so while we're pleased with our progress, there's a lot more to go here and we're excited about what the opportunity might present itself in the future. 20.

Speaker 5

Excellent. Thank you.

Operator

Thank 20. The next question comes from David Ocampo, Cormark Securities. Please go ahead.

Speaker 6

Thanks. Good morning, everyone. David. Good morning, David. I think everyone knows that GM raised some automation supply chain concerns 20.

Speaker 6

And I think you guys touched on it briefly in your prepared remarks. But I was hoping you guys could share a little bit more details on how you've been able to mitigate 20. Supply chain issues, particularly as it relates to delivering EV projects on time, which you alluded to in your remarks.

Speaker 2

Yes. So our business and if we look at the supply chain, we are seeing some improvements here 20. And we've actually seen lead times come down. But David, as we've walked in the past, we identified supply chain 20. As a real target years ago and our teams went into really a proactive countermeasure mode identifying where we might have a gap 20.

Speaker 2

And starting to align around how to minimize that impact. And we call it daily visual management where you basically look at the business 20. On a total level, at a regional level, at a site level, where you can understand where you have an impact and whether it's electronic or mechanical part 20.5 percent. And then determine where you minimize that impact. And our teams have done really an excellent job around minimizing this and turning it into a real advantage for ATS.

Speaker 2

20. Now we are seeing supply chain start to ease. I would say we're not back to pre pandemic levels, but it is moving in the right direction, especially on lead time. 20. And when we then look at the EV space, look, we're a proven leader in this space.

Speaker 2

We have a track record. 20. We've done more than 100 battery lines to date and we continue to position ourselves and have and look to have high value for customers that 20. We're going to navigate launching new EV solutions in the market. And so, continued focus, continued monitoring, but 20.

Speaker 2

Certainly something that is on our radar.

Speaker 6

Got it. That's perfect. And then just maybe a quick one for Ryan. If I take a look at 2018. Your working capital is above that 15% threshold.

Speaker 6

Should we be thinking about any big cash flow collection milestones in the quarter or maybe even 2 quarters from now to drive that lower?

Speaker 3

Well, so 20. A couple of things. I mean, you're right. Our goal is to maintain that below 15%. We've talked about 20.

Speaker 3

These large programs causing variability and certainly we've seen that in the uptick in this quarter. 20. I would say we're going to continue to see variability in this metric at period end. I mean cash flows 20. Coming in on these projects, but there was large project come large billing milestones.

Speaker 3

And if they fall 20. In the week after quarter end or the week before that can drive a pretty dramatic difference. But all to say that The cash collection are ongoing and we don't see any issue, but the variability we will continue to see 20.

Speaker 6

Got it. That's helpful. That's it for me. Thanks, guys. Thank you, David.

Operator

20. Thank you. The next question comes from Michael Doumet of Scotiabank. Please go ahead.

Speaker 1

Hey, good morning guys.

Speaker 7

Just to follow-up on the supply chain discussion. I wonder if you can maybe 20. To what extent it's still weighing on margins. Any way you can help us understand how much they've improved so far Again versus last year and then how much more to go to kind of get back to that desired margin level?

Speaker 3

Yes. Good morning, Michael. So there is still an impact. And keep in mind, a lot of what we do are projects which take 12 to 18 months to complete. And so the supply chain impacts that we've seen over the past year in in terms of inflation and lead time.

Speaker 3

Those are embedded in the work that we're executing today. 20. We've talked about in the past, our team has done an excellent job in implementing mitigation and working to overcome these challenges, 20. But it is part of our portfolio today. I would say as we see improvement and we talked about 20.

Speaker 3

Some incremental improvement, although generally, we're still not near pre pandemic Efficiency in terms of lead times. But as we see that improvement, it'll take 20. A quarter or 2, it really depends on where we are in projects, but it will take there will be a bit of a lag before we start to see any sort of benefit in our margins 20. From a return to normal supply chain environment perspective.

Speaker 7

That makes a ton of sense. And maybe on the lead times, 20. It feels like your peers are talking about, again, moderating lead time, just like

Speaker 2

you did

Speaker 7

here, which again I presume helps the supply chain, helps the margin profile. I wonder whether the normalization of lead times means We may see a normalization of your backlog as well as your burn rate over the next couple of quarters as customers You may not have to order as in advance as they did before.

Speaker 3

We haven't really Seeing that impact in our business. Most of I mean, what we're doing for customers, People we've been asked around double ordering and things like that. That's not an issue. I mean, we're doing 20. Typically, very strategic projects where a customer is launching a new product or they're ramping up capacity.

Speaker 3

20. And so it's not the type of item you're going to double order. From a lead time perspective, We've seen some extension of our project lead times due to supply chain, but we're also able to mitigate a lot of it 20. Through some of the tools that Andrew talked about when we're looking at daily visual management around lead times on specific components 20. And having that knowledge early in a project allows us to order.

Speaker 3

Now the challenge is that takes away some ability for us 2019. To drive efficiency in supply chain, but it doesn't affect schedule as much as it does affect efficiency.

Speaker 2

Perfect. Thanks for the color, though.

Operator

Thank you. 20. Our next question comes from Justin Keywood of Stifel. Please go ahead.

Speaker 8

Good morning. Thanks for taking my questions. On the comments surrounding digital, which I assume involves the PA business. Are you able to characterize the percentage of total revenue 2019. That would be classified as digital.

Speaker 8

And also if I heard correctly in the opening remarks, ATS is searching for a partner 20. In digital, if that is true, what would the criteria be and what type of form could that look like? Thanks.

Speaker 2

Yes. Good morning, Jess. I guess I'll start and Ryan can add. When we look at digital, it really is 20. We'll be in line with not only our PA business, but also our services impact.

Speaker 2

And it's one of the challenges that we've often looked at is how do you characterize 2019. As revenue from AI to digital to offered full services and so we do characterize this within our PA and Services business, and we continue to see real opportunity for growth here. We've had nice progress throughout the year. We also 2020. As far as partnering, we often look for partners around digital.

Speaker 2

We also look for future 20. Like Yazoom and others to bring that value to the market and we have a focus around owning the floor 20. And how we mean around that is the ability to extract, bring the data to an area where you take action on the 20. And so whether we own, whether we partner, whether we innovate to bring solution, We are constantly looking to move up that value chain for owning the production, owning the capability for customers. And as a reminder, Most sites with our customer base are brownfield sites, meaning they've been in existence and they look for solutions like what PA can bring to market, where they want to digitize a production floor that maybe doesn't have the ability to have a digital output and we bring that to market.

Speaker 2

20.

Speaker 3

And Justin, just on the first part of your question. So in terms of software digital revenues, It's in the low single digit percentage of our overall revenue base today.

Speaker 8

20. And would that be close to Software as a Service revenue or SaaS?

Speaker 3

Yes. 20. Short answer is yes.

Speaker 8

Okay, great. And then just on M and A, if you can provide us an update on the funnel 20. Target segments that you're looking at, any changes in multiple? And then also, I believe, Ryan mentioned 2019. The net debt to EBITDA and bringing that up potentially for a quarter or 2 on M and A and what that could look like?

Speaker 8

Thank you.

Speaker 2

Sure. I'll take the first part and then Ryan can walk through the second. Look, our funnel remains healthy and it has a good mix of small, medium and large deals. And one of the things that we've really been lining up and the ABM has helped here is our process around 20. When we identify to driving to the ability to either move forward or not and really enabling that continuous improvement on cultivation as well as 20.

Speaker 2

And so our phone remains healthy. As you know, we have a focus on always cultivating. We are 20. Always cultivating and looking for technologies and IP in the spaces that we view are high consequence of failure and 20. Whether it's life sciences or digital or capabilities that go across platforms, we are

Speaker 3

And Justin, in terms of leverage, so we've talked about a 2x to 3x range for leverage. 20. We would be open to exceeding that in the short term. It's 3.5 potentially, but that would really depend on the asset and their profile and where we see short term working capital needs for our business. And 20.

Speaker 3

So I don't want to put a definitive number out there, but it's something we would consider in the right circumstance.

Speaker 8

20. Understood. Thanks for taking my questions.

Speaker 2

Thank you.

Operator

20. Thank you. The next question comes from Sabahat Khan of RBC Capital. 20. Please go ahead.

Speaker 5

Great. Thanks and good morning. I guess just a question on kind of the larger push towards after sales service and illuminate. 20. In the current environment, can you maybe talk about your go to market strategy with getting more customers sort of activate that software and sort of how you're pushing the

Speaker 2

So I'll answer that almost going backwards. And our view is 2019. It does magnify us. As things become potentially uncertain, we do view services, we view the digital capability as enabling our customers to Virtually maximize their assets in the field. And so we do view this as real opportunity and a continued opportunity that we can bring high value to.

Speaker 2

As far as the digital approach and how we're positioning it, 20. We have launched tools like demand generation, lead generation. We have launched tools like value selling 20. And really identifying where customers see that the most significant value. And personally, I've been on calls with customers where Bill often talk, we don't just want a dashboard anymore.

Speaker 2

You have to help us implement solutions. And we do that very effectively and we've actually acquired a business I've talked about in the past called BLSG, where we take that insight and we help them implement the solution. 20. I do want to come back to your statement around Illuminate and I just want to remind that Illuminate is an on prem solution and our PA fax is in the cloud. And so we're continuing to push in the cloud.

Speaker 2

It's obviously an area that we view has a both have a lot of potential, 20. What we can offer both to customers, whether they need to be on Primo or in the cloud and really maximize that performance, maximize the usage of data to improve process.

Speaker 5

20. Great. And then I guess just one on sort of end markets. Transportation has obviously become a big part of the mix, 20. But now you're seeing kind of growth in spaces like life sciences and so forth.

Speaker 5

I guess, 12 months, 24 months from now, what do you envision your end market mix looks like or does it more 20. Do you think it evolves more and it's unclear at this point? Just curious based on the discussions you're having and where you're seeing the demand indicators, what that mix Could look like 1, 2 years from now. Thank you.

Speaker 1

Yes.

Speaker 2

So it's always hard to predict the percent of HS. We like the spaces we serve. We like the areas we serve. And if I can just walk through them, 2019. Life sciences, I characterize as a strong funnel and we're seeing real opportunity in areas like auto injectors, contact lenses, pharma, radio pharma, 20.

Speaker 2

And we're continually launching new solutions in this space that have real value and high value to customers. And 2. I just heard not to reference the Symphony platform. I was with the innovation team yesterday going through 20. And they're using AI to bring solution sets around an area of auto injectors where they can identify defects early on, so you don't continue to add value in 2019.

Speaker 2

And so we see a lot of areas that we can continue to expand and we see growth in the market itself. 2019. Life science is going to be a continued focus for us. EV or transportation, more specifically EV, look, this is an area that we continue to see opportunity. And I've The market space and launching new vehicles, we see our funnel is healthy here.

Speaker 2

It is going to be more variable And that these are large programs, large projects often starting with a pilot going to production over a period of time. 2018. In food and beverage, pleased with the progress. We like this space. I talked about our business Ray Tech with optical sorting.

Speaker 2

20. We see continued opportunity here. And then just to round this out with energy and nuclear, 20. The change for nuclear being a greener energy and alignment to not only refurbishment, but 20.5%. Small module reactors is seeing real opportunity for ATS.

Speaker 2

It is a niche capability within our group. And as one that we view, we can We'll offer high value for our customers both on the initial as well as serving and supporting. So overall, we like the mix, we like the area of focus 2019. And we're going to continue to drive both organic and potentially inorganic growth in the spaces that we view have long term value for our shareholders.

Speaker 5

20. Great. Thanks very much.

Operator

Thank you. 20. There are no further questions. I will turn the call back to Mr. Hyder for closing remarks.

Speaker 2

Thank you, operator. We look forward to pursuing ongoing value creation in fiscal 2024. We believe that our capabilities align well 2019, and we will continue to focus on our business and our business. If you haven't already done so, 20. I encourage you to register for our Institutional Investor Day on September 6 in New York.

Speaker 2

There, you will hear directly 2019. From members of the ATS executive team on corporate strategy, our growth opportunities, key business groups and our financial value drivers. 20. More immediately, we also invite you to participate in our Annual and Special Shareholders Meeting, which will be held virtually tomorrow beginning at 10 am Eastern Time. 20.

Speaker 2

Otherwise, I look forward to speaking to you on our Q2 call in November. Thank you for joining us today. Stay safe and goodbye for now.

Operator

Ladies and gentlemen, this does conclude the conference call for today. We thank you for your participation and ask that you please disconnect your lines.

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Key Takeaways

  • ATS completed its U.S. IPO and New York Stock Exchange listing, providing increased liquidity and enhanced flexibility to pursue strategic growth and M&A opportunities.
  • In Q1 FY 2024, ATS delivered a record revenue of $754 million (up 23% year-over-year), $690 million in bookings, and ended with a backlog exceeding $2 billion, driven by strength in Life Sciences and EV/Transportation.
  • The company’s disciplined ATS Business Model (ABM) continues to mature, with 45 ABM events this quarter helping to drive margin expansion and operational improvements across all business units.
  • Key acquisitions—Yazoom for AI/process optimization and Odyssey Validation for digital services—complement ATS’s IoT and after-sales offerings, evidenced by new global management services contracts and embedded remote support platforms.
  • While supply-chain pressures and inflationary headwinds remain, ATS has begun to see improvements in lead times and continues to innovate with technologies like its Symphony assembly platform and advanced radiopharmaceutical/evaporator solutions.
AI Generated. May Contain Errors.
Earnings Conference Call
ATS Q1 2024
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