ATS Reports First Quarter Fiscal 2014 Results
>Editor's note: This release has been truncated
ATS Automation Tooling Systems Inc. (TSX: ATA) ("ATS" or the "Company") today reported financial results for the three months ended June 30, 2013 for its continuing operations (Automation Systems Group or "ASG") and discontinued operations ("Solar").
First Quarter Summary
- Revenues from continuing operations were $150.0 million, compared to $153.2 million in the fourth quarter of fiscal 2013 and $152.2 million in the first quarter a year ago;
- Earnings from continuing operations were $12.7 million, which included $2.2 million in restructuring charges incurred to re-balance global capacity and improve the Company's cost structure. Excluding restructuring charges, normalized earnings from continuing operations were $14.9 million (10% operating margin), compared to $14.0 million (9% operating margin) in the fourth quarter of fiscal 2013, and $15.2 million (10% operating margin) in the first quarter a year ago;
- EBITDA normalized to exclude restructuring charges was $18.0 million (12% EBITDA margin) compared to $17.3 million (11% EBITDA margin) in the fourth quarter of fiscal 2013 and $18.1 million (12% EBITDA margin) in the first quarter a year ago;
- Normalized Earnings Per Share (EPS) from continuing operations was $0.12 compared to $0.13 a year ago. Diluted EPS was $0.22, reflecting EPS from continuing operations of $0.10 and EPS from discontinued operations of $0.12, compared to $0.11 a year ago;
- Order Bookings were $165 million compared to $170 million in the fourth quarter of fiscal 2013 and $168 million in the first quarter a year ago;
- Order Backlog increased to a record $415 million, up 4% from $398 million in the fourth quarter of fiscal 2013 and up 5% from $397 million in the first quarter a year ago;
- The Company's balance sheet and financial capacity to support growth remained strong, with cash net of debt in continuing operations of $129.4 million at June 30, 2013, unutilized credit facilities of $200.7 million and $26.2 million of credit available under letter of credit facilities; and
- The Company sold the manufacturing assets of its discontinued Ontario Solar business and a 75% interest in four of seven ground mount solar projects owned through its 50% joint operation, Ontario Solar PV Fields ("OSPV"). The Company realized cash proceeds of approximately $20 million on these transactions. Future cash proceeds are expected to be realized as the balance of these sales are completed and the sale of the remaining three ground mount solar projects is completed.
First Quarter Summary - Continuing Operations
Fiscal 2014 first quarter revenues were 1% lower than in the corresponding period a year ago. By industrial market, revenues from life sciences increased 25% year over year due to higher Order Backlog entering the first quarter compared to a year ago on continued market strength. This was offset by a 31% decrease in consumer products & electronics revenues, which reflected lower Order Backlog entering the first quarter compared to a year ago, due to reduced activity primarily in the consumer products market. Revenues generated in the energy market decreased 46% on lower Order Backlog entering the first quarter compared to a year ago, reflecting reduced activity primarily in the solar market. A 6% decrease in transportation revenues compared to a year ago primarily reflected the timing of various larger opportunities.
Fiscal 2014 first quarter earnings from operations were $12.7 million (8% operating margin) compared to $15.2 million (10% operating margin) in the first quarter of fiscal 2013. Excluding $2.2 million in restructuring charges incurred to re-balance global capacity and improve the Company's cost structure, fiscal 2014 first quarter earnings from operations were $14.9 million (10% operating margin). Normalized earnings from operations in the first quarter of fiscal 2014 primarily reflected slightly lower revenues and higher stock-based compensation costs, which were partially offset by lower SG&A spending compared to a year ago.
ASG Order Bookings
First quarter fiscal 2014 Order Bookings were $165 million, a 2% decrease from the first quarter of fiscal 2013. Lower Order Bookings primarily reflected the timing of various larger opportunities in the transportation market, partially offset by increased Order Bookings in Energy, due largely to strength in the nuclear market, and in Life Sciences on continued strong market activity. Included in first quarter fiscal 2014 Order Bookings were further milestone payments of 15 million Euro related to the Company's approximately 65 million Euro contract to supply turnkey equipment and automation to produce medical devices in a new production facility in Nigeria. Payments received in relation to this program now total approximately 25 million Euro. The Company will record the balance of the Order Booking and Order Backlog if and when financial close is reached or as additional milestone payments are received.
First Quarter Summary of Discontinued Operations: Solar
Fiscal 2014 first quarter income from discontinued operations reflected a gain of $10.8 million from the sale of Ontario Solar's 75% ownership in four ground-mount solar projects. Net proceeds to the Company are expected to be $21.4 million, of which the Company has received gross proceeds of $15.4 million during the first quarter and $0.5 million in fiscal 2013. OSPV will retain 25% ownership of the projects until they reach commercial operation, which is expected in calendar 2014.
During the first quarter of fiscal 2014, the Company sold its Ontario Solar manufacturing assets and inventory, which resulted in a gain of $3.0 million. Net proceeds to the Company were $6.5 million of which two-thirds was received during the first quarter, with the final one-third expected to be paid in the third quarter of fiscal 2014. The Ontario Solar business was wound down in the first quarter of fiscal 2014.
The Company has signed a definitive agreement for the sale of its other three ground-mount solar projects. This 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 calendar 2013. OSPV will retain 25% ownership of the projects until the projects reach commercial operation, which is expected to occur in calendar 2014. Net proceeds to the Company are expected to be approximately $10 million, which is expected to be paid based on the projects achieving certain development milestones.
Overall, management expects to record a gain on these divestitures as the sales are completed and proceeds realized. Subsequent to the settlement of outstanding liabilities, net proceeds from the divestiture of Ontario Solar will be re-allocated to ASG to support growth.
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 2,200 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.
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