ATS Reports First Quarter Fiscal 2021 Results
CAMBRIDGE, ON - ATS Automation Tooling Systems Inc. (TSX: ATA) ("ATS" or the "Company") today reported its financial results for the three months ended June 28, 2020, a period marked by lower customer activity and production inefficiencies due to the COVID-19 pandemic.
[ATS Automation Tooling Systems (CNW Group/ATS Automation Tooling Systems Inc.)]
First quarter summary:
- Revenues decreased 4% to $324.9 million.
- Earnings from operations were $21.1 million (6% operating margin), compared to $28.6 million (8% operating margin) a year ago. Adjusted earnings from operations1 were $29.7 million (9% margin), compared to $38.0 million (11% margin) a year ago.
- EBITDA1 was $39.2 million (12% EBITDA margin), compared to $47.2 million (14% EBITDA margin) a year ago.
- Earnings per share were 11 cents basic and diluted compared to 18 cents a year ago.
- Adjusted basic earnings per share1 were 17 cents compared to 25 cents a year ago.
- Order Bookings were $325 million, 23% lower than a year ago.
- Order Backlog decreased 7% to $909 million at June 28, 2020 compared to $982 million a year ago.
- Subsequent to the first quarter, the Company amended its $750 million senior secured credit facility and extended the agreement by one year to August 29, 2022.
"Our teams delivered exceptional work for customers during the first quarter, despite the challenges brought on by COVID-19," said Andrew Hider, Chief Executive Officer. "By introducing enhanced facility cleaning and physical distancing measures, we kept all of our global operations open and functioning in a safe manner and maintained our focus on innovation and continuous improvement. While uncertainty remains, we will continue to take active measures to adjust our business to meet changing market conditions. We are in a good position to succeed with a healthy Order Backlog, a strong balance sheet and the capabilities to emerge from this downturn in a strong competitive position."
First quarter summary
Fiscal 2021 first quarter revenues were 4% lower than in the corresponding period a year ago and included $8.0 million of revenues earned by acquired companies. Excluding acquired companies, first quarter revenues decreased $22.3 million, or 6% compared to the corresponding period a year ago. Revenues from services decreased 19% due primarily to travel restrictions and temporary closures and entry restrictions at some customer sites. Revenues from the sale of goods decreased 24% due primarily to lower after-sales services activity. This was partially offset by a 7% increase in revenues generated by construction contracts primarily due to the timing of program completion and contributions by acquired companies.
By market, revenues generated in life sciences increased 6% primarily due to short-duration mandates to help customers rapidly transition production to personal protective equipment and ramp-up production of critical life sciences products to aid in the fight against COVID-19. Revenues in the energy market increased 5% due to higher Order Backlog entering the first quarter of fiscal 2021, primarily related to programs for the nuclear market. Revenues in the transportation and consumer products markets decreased 23% and 10%, respectively, due to lower service activity and the timing of project performance.
Fiscal 2021 first quarter earnings from operations were $21.1 million (6% operating margin) compared to $28.6 million (8% operating margin) in the first quarter a year ago. Earnings from operations included $8.6 million related to amortization of acquisition-related intangible assets, down from $9.4 million of amortization of acquisition-related intangible assets in the comparable period a year ago.
Excluding amortization of acquisition-related intangible assets in both comparable quarters, adjusted earnings from operations were $29.7 million (9% margin), compared to $38.0 million (11% margin) a year ago. First quarter fiscal 2021 adjusted earnings from operations reflected lower revenues and operational inefficiencies due to new health and safety measures, including protocols to enable physical distancing. Travel restrictions, temporary closures and entry restrictions at some customer sites, disrupted normal operations including after-sales services activities and added costs to projects. These increases were partially offset by lower selling, general and administrative expenses and stock compensation expenses. The Company benefited from payments received under the Canadian Emergency Wage Subsidy ("CEWS") program of $7.5 million, of which $5.6 million was recorded in Cost of Sales and $1.9 million was recorded in selling, general and administrative expenses. These payments were utilized by the Company to partially offset operational inefficiencies, minimize temporary work reductions and maintain employment of the Company's highly skilled workforce. In addition, the Company realized benefits from cost containment measures including those taken during a reorganization completed in late fiscal 2020 and those implemented since in response to the challenging business conditions brought on by the COVID-19 pandemic.
Depreciation and amortization expense was $18.1 million in the first quarter of fiscal 2021, compared to $18.6 million a year ago. The decrease primarily reflected decreased amortization of acquisition-related intangible assets.
EBITDA was $39.2 million (12% EBITDA margin) in the first quarter of fiscal 2021, compared to $47.2 million (14% EBITDA margin) in the first quarter of fiscal 2020. Lower EBITDA reflected lower revenues and gross margin due to lower after-sales services revenues and operational inefficiencies, partially offset by lower selling, general and administrative expenses and stock compensation expenses compared to a year ago.