ATS Announces Plan For Transportation Business Reorganization
CAMBRIDGE, ON /CNW/ - ATS Automation Tooling Systems Inc. (TSX: ATA) ("ATS" or the "Company"), an industry-leading automation solutions provider, today announced a reorganization plan to help mitigate the expected impact of a downturn in its transportation markets brought on by the COVID-19 pandemic.
The reorganization plan is expected to be completed by the end of the fiscal year and includes the closure of facilities along with workforce reductions primarily in Europe and Asia. Management expects to incur total restructuring costs of approximately $24 million. Costs will be incurred during the second and third quarters of the current fiscal year. Certain of the Company's foreign operations will engage in normal-course consultation and notice processes with local employee representative bodies regarding the implementation of the reorganization plan at the relevant foreign operations.
"This action is necessary to align the capacity and cost structure of our business to current and expected conditions in the transportation market," said Andrew Hider, Chief Executive Officer. "By implementing the plan now, we will help to mitigate against future margin erosion and emerge to serve transportation customer opportunities that are aligned with our technologies, capabilities and objectives for value creation."
ATS serves customers in four vertical markets: life sciences (55% of trailing twelve-month revenues for the period ending June 28, 2020), transportation (26% of revenues), consumer (12% of revenues) and energy (7% of revenues).
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 aftersales services, to address the sophisticated manufacturing automation systems and service needs of multinational customers in markets such as life sciences, chemicals, consumer products, electronics, food, beverage, transportation, energy, and oil and gas. Founded in 1978, ATS employs approximately 4,400 people at 22 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.
Note to Readers: Forward-Looking Statements
This news release contains certain statements that 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 are 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. Forward-looking statements relate to, among other things, the expected impact of a downturn in the Company's transportation markets, expected timing of completion of the reorganization plan, and the expected cost thereof. The risks and uncertainties that may affect forward-looking statements include, among others: the progression of COVID-19 and its impacts on the Company's ability to operate its assets, including the possible shut-down of facilities due to COVID-19 outbreaks; the severity and duration of the COVID-19 pandemic in all jurisdictions where the Company conducts its business; the nature and extent of government imposed restrictions on travel and business activities and the nature, extent, and applicability of government assistance programs, in both cases related to the COVID-19 pandemic, as applicable in all jurisdictions where the Company conducts its business; the impact of the COVID-19 pandemic on the Company's employees, customers, and suppliers; the impact of the global economy and general market performance; performance of the transportation market; 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; management effectiveness and disaster response preparedness, including business continuity plans in response to COVID-19; 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; risks relating to legal proceedings to which ATS is or may become a party; exposure to product and/or professional liability claims; and other risks detailed from time to time in ATS' filings with Canadian provincial securities regulators. There can be no assurance that forward-looking statements or information will prove to be accurate, as actual results and future events could differ materially from those anticipated in such statements. Accordingly, you should not place undue reliance on the forward-looking statements or information contained herein which speak only as of the date they are made. 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.