ATS Reports First Quarter Fiscal 2010 Results

CAMBRIDGE, ON, Aug. 12 /CNW/ - ATS Automation Tooling Systems Inc. ("ATS") today reported its financial results for the three months ended June 28, 2009.

First Quarter Summary

• Consolidated revenue was $152.7 million compared to $212.1 million a year ago;
• Consolidated earnings from operations decreased to $0.5 million from $16.3 million a year ago;
• Earnings were $0.00 per share (basic and diluted) compared to $0.17 per share (basic and diluted) a year ago;
• A strong balance sheet was maintained with cash net of debt of $86.6 million at June 28, 2009 compared to $106.5 million at March 31, 2009 and $27.1 million at June 30, 2008.

The Automation Systems Group's ("ASG") customers and the markets into which ASG sells continue to be negatively impacted by the current global economic recession. ASG customers have reduced their capital spending and/or are delaying programs to varying degrees depending on the market segment and some may experience financial difficulties. At Photowatt, tighter global credit markets have reduced available funding for solar installation projects. The resulting reduction in demand for solar modules, in addition to increased global module capacity in the solar industry, have caused average selling prices to decrease and could result in sustained over-supply in fiscal 2010.

"The global economic environment has continued to present our businesses with significant challenges," said Anthony Caputo, Chief Executive Officer. "At Photowatt, low demand has extended into the first quarter, while ASG is increasingly seeing the impact of the economic slow-down in its Order Bookings. To deal with this, we are continuing with our restructuring and consolidation initiatives, while seeking to offset negative market conditions through our downstream initiatives in Photowatt and our efforts to improve ASG's approach to market."

Automation Systems Group Results

• Revenue decreased 19% to $115.2 million from $142.7 million a year ago;
• EBITDA increased 36% to $16.7 million compared to $12.3 million a year ago;
• Earnings from operations were $14.8 million, up 44% from $10.3 million a year ago;
• Period end Order Backlog decreased 11% to $230 million from $258 million a year ago;
• Order Bookings declined 43% to $96 million compared to $169 million a year ago, and included two significant healthcare orders totalling approximately $34 million;
• Order Bookings were $28 million during the first six weeks of the second quarter.

Despite the decline in revenues, operating margin (excluding severance and restructuring charges of $2.1 million incurred in the quarter) was maintained at 15% compared to 7% and 15% in the first and fourth quarters of fiscal 2009, respectively. Revenue increased year over year by 29% in energy, offset by declines of 13% in healthcare, 58% in computer-electronics, 41% in automotive, and 15% in "other" markets (primarily consumer products). 

Photowatt Technologies Results

• Revenue decreased by 42% to $40.1 million from 69.3 million a year ago;
• Photowatt France's ("PWF") EBITDA was negative $3.4 million compared to EBITDA of $9.3 million a year ago;
• Photowatt Technologies incurred an operating loss of $7.5 million compared to operating earnings of $10.5 million a year ago, which included gains on the sale of the Spheral Solar building and silicon of $3.2 million and $2.0 million respectively;
• Total megawatts (MWs) sold at Photowatt France decreased 40% to 8.3 MWs from 13.8 MWs in the first quarter of fiscal 2009 - with UMG- Si products accounting for 27% of revenue compared to 54% in the first quarter a year ago.

The year-over-year decline in operating results reflected lower MWs sold due to the impact on demand of tighter credit markets, which restricted funding available for solar projects and lower average selling prices. PWF increased revenue from the sale of Systems to approximately $24.8 million from $13.3 million in the first quarter of fiscal 2009, which partially offset lower module demand and average selling prices. PWF's operating loss included a $4.7 million warranty charge related to a specific customer contract which contained an incremental performance clause beyond PWF's standard warranty terms.

Quarterly Conference Call

ATS's quarterly conference call begins at 10 am eastern today and can be accessed over the Internet at www.atsautomation.com or on the phone at 416 644 3416.

Annual and Special Meeting of Shareholders

ATS will hold its Annual and Special Meeting of Shareholders on August 13, 2009 at 10:00 a.m. (eastern) at the Holiday Inn Hotel and Conference Centre, 30 Fairway Road South, Kitchener, Ontario, Canada.

About ATS

ATS Automation Tooling Systems Inc. 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 healthcare, computer/electronics, energy, automotive and consumer products. It also leverages its many years of experience and skills to fulfill the specialized automation product manufacturing requirements of customers. Through Photowatt Technologies, ATS participates in the growing solar energy industry as an integrated manufacturer of ingots, wafers, cells and modules. Photowatt-branded products and systems serve businesses, institutions and homeowners in established and emerging markets. ATS employs approximately 2,400 people at 14 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 at www.atsautomation.com.

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Management's Discussion and Analysis

This Management's Discussion and Analysis ("MD&A") for the three months ended June 28, 2009 (first quarter of fiscal 2010) is as of August 11, 2009 and provides information on the operating activities, performance and financial position of ATS Automation Tooling Systems Inc. ("ATS" or the "Company") and should be read in conjunction with the unaudited interim consolidated financial statements of the Company for the first quarter of fiscal 2010. The Company assumes that the reader of this MD&A has access to, and has read the audited consolidated financial statements and MD&A of the Company for the year ended March 31, 2009 (fiscal 2009) and, accordingly, the purpose of this document is to provide a first quarter update to the information contained in the fiscal 2009 MD&A. These documents and other information relating to the Company, including the Company's fiscal 2009 audited consolidated financial statements, MD&A and annual information form may be found on SEDAR at www.sedar.com.

Notice to Reader

The Company has two reportable segments: Automation Systems Group ("ASG") and Photowatt Technologies which includes Photowatt France ("PWF") (the ongoing Photowatt Technologies operations), and Other Solar which is comprised of now closed solar divisions, principally Photowatt U.S.A., a small module assembly facility and sales operation closed during fiscal 2008 and Spheral Solar, a halted development project that has been wound down. References to Photowatt's cell "efficiency" means the percentage of incident energy that is converted into electrical energy in a solar cell. Solar cells and modules are sold based on wattage output. "Silicon" refers to a variety of silicon feedstock, including polysilicon, upgraded metallurgical silicon ("UMG-Si") and polysilicon powders and fines. As described in note 5 to the interim consolidated financial statements, during fiscal 2009, the Company completed the sale of its Precision Components Group ("PCG"). The sale included the segment's key operating assets and liabilities including its China-based subsidiary. The results of PCG are reported in discontinued operations.

Non-GAAP Measures

Throughout this document the term "operating earnings" is used to denote earnings (loss) from operations. EBITDA is also used and is defined as earnings (loss) from operations excluding depreciation and amortization (which includes amortization of intangible assets). The term "margin" refers to an amount as a percentage of revenue. The terms "earnings (loss) from operations", "operating earnings", "margin", "operating loss", "operating results", "operating margin", "EBITDA", "Order Bookings" and "Order Backlog" do not have any standardized meaning prescribed within Canadian generally accepted accounting principles ("GAAP") and therefore may not be comparable to similar measures presented by other companies. Operating earnings and EBITDA are some of the measures the Company uses to evaluate the performance of its segments. Management believes that ATS shareholders and potential investors in ATS use non-GAAP financial measures such as operating earnings and EBITDA in making investment decisions about the Company and measuring its operational results. A reconciliation of operating earnings and EBITDA to total Company net income for the first quarters of fiscal 2010 and 2009 is contained in this MD&A (See "Reconciliation of EBITDA to GAAP Measures"). EBITDA should not be construed as a substitute for net income determined in accordance with GAAP. Order Bookings represent new orders for the supply of automation systems and products that management believes are firm. Order Backlog is the estimated unearned portion of ASG revenue on customer contracts that are in process and have not been completed at the specified date. A reconciliation of Order Bookings and Order Backlog to total Company revenue for the first quarters of fiscal 2010 and 2009 is contained in the MD&A (See "ASG Order Backlog Continuity").