ATS reports fourth quarter results and pick-up in first
quarter automation bookings
TSE Symbol: ATA
TSX: ATA
CAMBRIDGE, ON, May 16 /CNW/ - ATS Automation Tooling Systems Inc. today
reported breakeven financial performance for the three months ended March 31,
2002 -- and net earnings of $12.6 million for the full fiscal year -- as its
global market leadership helped to mitigate the negative impact of a
pronounced economic contraction in capital expenditure markets. The Company
also reported a sizeable increase in new automation order activity since year-
end, an indicator that a recovery may be underway.
"ATS capitalized on its industry leadership position and broadly-
diversified customer base in fiscal 2002 to weather a dramatic economic
downturn," said Klaus Woerner, President and Chief Executive Officer. "While
the downturn in capital spending and new customer product launches interrupted
ATS's long track record of substantial growth, it did not stop the Company
from securing important new opportunities, generating revenue growth in
Precision Components operations, and adding capabilities and partnerships.
Most important, ATS emerged from fiscal 2002 with excellent customer
relationships, a strong balance sheet and the full resources to win and serve
new business in an environment that is now showing good signs of improvement --
based on a brisk pace of new automation order and quotation activity since the
end of fiscal 2002."
Fourth Quarter Highlights
- Net earnings were $0.2 million (0 cents per share) versus net
earnings of $13.7 million (23 cents per share basic and diluted) in
the same quarter a year ago as a small operating loss in Automation
Systems Group was offset by strong Precision Components performance.
- Consolidated revenue was $130.4 million, 32% lower than the record
high $192.0 million achieved a year earlier -- but 5% ahead of the
third quarter of fiscal 2002.
- New automation systems order bookings were $94.2 million, versus
$116.0 million a year ago. Since year end, new order bookings and
commitments have totalled approximately $77 million.
- Quarter end automation systems backlog was $168.3 million, versus
$168.2 million at the start of the quarter and $212.3 million a year
earlier.
- Cash flow from operating activities was $45.8 million versus
$17.7 million a year ago.
- Period end net cash stood at $110.2 million versus $68.9 million a
year ago.
Fiscal Year Highlights
In fiscal 2002, ATS generated consolidated revenue of $549.5 million
compared to a record $679.0 million in fiscal 2001, and net earnings of
$12.6 million (21 cents per share) versus record net earnings of $46.2 million
(79 cents per share basic, 77 cents per share diluted) in fiscal 2001.
Consolidated revenue for fiscal 2002 was lower due to a 25% decline in
Automation Systems contribution which more than offset a 5% increase in
Precision Components revenue over fiscal 2001.
Balance Sheet
The Company's already strong balance sheet strengthened further in fiscal
2002. ATS had net cash of $110.2 million at March 31, 2002, versus
$68.9 million a year earlier, while debt to equity ratio at March 31, 2002 was
0.1 to 1. The Company believes its strong financial position is a competitive
advantage in the marketplace and positions ATS to carry out both its organic
growth strategies and its strategy of making strategic acquisitions to enhance
customer and shareholder value.
<<
Revenue by Industry
($ millions)
13 weeks ended 52 weeks ended
03/31/ 03/31/ 03/31/ 03/31/
2002 2001 2002 2001
-------------------------------------------------------------------------
Automation Systems:
Automotive $ 40.5 $ 33.9 $ 158.5 $ 169.7
Computer/Electronics 25.6 84.8 141.2 247.5
Healthcare 15.3 27.0 70.1 76.4
Other 5.4 7.2 23.9 32.1
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Subtotal 86.8 152.9 393.7 525.7
Precision Components:
Automotive 27.7 25.1 102.3 95.6
Solar 15.3 13.4 50.9 42.7
Computer-electronics 1.2 1.8 3.9 16.7
Other 2.3 0.7 7.6 1.4
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Subtotal 46.5 41.0 164.7 156.4
Intersegment Elimination (2.9) (1.9) (8.9) (3.1)
-------------------------------------------------------------------------
Total Consolidated Revenue $ 130.4 $ 192.0 $ 549.5 $ 679.0
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Fourth Quarter Revenue
In the fourth quarter of fiscal 2002:
- ATS Automation Systems Group revenue was $86.8 million, versus a
record high $152.9 million in the fourth quarter of fiscal 2001, as
revenue growth of 19% in the automotive market was more than offset
by a 70% decline in computer-electronics and a 43% reduction in
healthcare revenue. Overall market declines reflected the downturn in
capital expenditure markets which began about six quarters ago.
- Revenue from ATS Precision Components Group increased 13% to
$46.5 million from $41.0 million a year earlier, reflecting a record
contribution by Photowatt solar revenue, and the contributions of
Omex, a metal forming company acquired at the end of the first
quarter of fiscal 2002. Photowatt solar revenue represented 33% of
total Precision Components Group revenue in the quarter (and 31% for
the year, versus 27% for fiscal 2001).
Consolidated Revenue by Region
($ millions)
13 weeks ended 52 weeks ended
03/31/ 03/31/ 03/31/ 03/31/
2002 2001 2002 2001
-------------------------------------------------------------------------
U.S. & Mexico $ 70.4 $ 132.4 $ 333.4 $ 474.5
Europe 25.5 27.6 110.1 92.4
Asia-Pacific and other 18.0 14.9 53.3 59.4
Canada 16.5 17.1 52.7 52.7
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Total $ 130.4 $ 192.0 $ 549.5 $ 679.0
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Fourth Quarter Operating Results
Automation Systems Group operated at slightly below breakeven in the
quarter, with an operating loss of $0.7 million versus record high operating
profit of $23.6 million (15.5% margin) in the fourth quarter a year ago. The
Group's operating results in the quarter -- and full year -- were heavily
impacted by the decline in revenue and excess capacity, which was partially
tied to the Company's decision not to reduce its skilled workforce as a way to
avoid significant future costs for recruitment and training. The current
quarter's operating results also included $3.2 million in non-cash charges to
write-down the value of certain inventories and $0.4 million in severance
expenses primarily for a limited number of management changes in some
operating divisions. The write-downs, spread across four different automation
systems business lines, was determined to be prudent based on the likely
impact of design changes and, to a lesser degree, the economic environment.
Precision Components generated a five-fold increase in fourth quarter
operating income, which stood at $3.5 million in the quarter versus
$0.7 million in the comparable quarter of fiscal 2001. This sizeable
improvement was primarily driven by the contributions of Omex and improved
earnings from the core precision components operations. The Company's
Photowatt operations also continued to perform well during the period
contributing positively to operating earnings. The Group's operating margin in
the fourth quarter of fiscal 2002 was 7.5% versus 1.6% a year earlier.
Outlook
At March 31, 2002, automation systems order backlog was $168.3 million,
compared to $168.2 million at the start of the quarter and $212.3 million a
year earlier. Computer/electronics backlog was 64% lower year-over-year with
close to half of this reduction the result of lower contributions from fiber
optics and semiconductor, markets which experienced significant downturns in
the past 18 months. Automation systems order backlog from healthcare customers
was 20% lower while the automotive segment increased 47% year-over-year, and
contributions from the "other" segment were ahead 29% compared to the end of
fiscal 2001.
New automation systems order bookings in the fourth quarter were
$94.2 million, 19% lower than bookings of $116.0 million in the fourth quarter
of fiscal 2001. Order cancellations and scope reductions, while less than half
of what they were in the third quarter of fiscal 2002, amounted to
$7.3 million in the fourth quarter of fiscal 2002. $4.7 million of this total
reflected changes in scope arising as part of the design process, rather than
cancellations. Order activity was broader based in the fourth quarter compared
to the third quarter of fiscal 2002 when approximately 25% of the
$110.5 million in new order booking activity came from only two automotive
orders.
Automation Systems Backlog by Industry
($ millions)
03/31/ 03/31/
2002 2001
-------------------------------------------------------------------------
Computer/Electronics $ 35.2 $ 98.7
Automotive 79.3 53.8
Healthcare 38.2 47.7
Other 15.6 12.1
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Total $ 168.3 $ 212.3
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Since the end of the fourth quarter, the pace of new automation systems
orders and order commitments has increased with approximately $77 million in
new business won in the first six weeks of the first quarter of the new fiscal
2003 year.
"Indications are the economic recovery may be gradual, but based on the
strengthening indicators we've seen since the start of this year, strong
quotation activity and a much more positive and active attitude by customers
in many of our markets, we expect ATS will be able to generate better results
this fiscal year than last in both core Automation Systems and Precision
Components," said Mr. Woerner. "With the technology advancements made in the
past year to expand capabilities, and our ability to respond immediately to
new opportunities, ATS is extremely well placed to participate fully in this
market renewal."
ATS launched a new family of standard automation products, called
Flexsys, in the fourth quarter and Mr. Woerner said it will be particularly
important "in answering the needs of manufacturers with global production
mandates who need quick deployment, scalability and low cost of ownership.
This is an advancement that's right for the time."
Adding to core business momentum are the Company's solar and thermal
products initiatives.
"Photowatt has made major strides in the past year and is one of the few
solar companies in this growing niche to make money," he said. "Although very
recently we've seen some pricing pressure in this market, Photowatt has much
better operating efficiencies because of production advancements made in the
past year and this should allow it to make meaningful contributions again this
fiscal year."
ATS has also secured its first production orders for thermal products,
which, based upon customer forecasts, "may add $12 million to $13 million in
revenue in this fiscal 2003 year," said Mr. Woerner, "and this is just a
beginning.
"Our thermal products initiative is now more mature, and has the support
of major companies in the field who are launching higher-speed processors
which need the cooling power our technology can provide. ATS thermal products
are now fully qualified to perform at these higher speeds and we have secured
an strategic sales arrangement with Tyco Electronics that is adding to market
penetration and enhancing ATS's visibility with potential customers."
ATS is targeting both new and existing markets for automation and
precision components -- using its proven business strategies -- and intends,
said Mr. Woerner, "to put additional emphasis in several areas including the
European market for automation, as well as niches we've identified within
healthcare and electronics. Today, ATS has more capabilities to offer
customers as the recognized industry leader, and an even greater resolve to
restore our traditional pace of growth. ATS used the past year wisely to
advance its position and we look forward to delivering the benefits to
shareholders and customers."
Quarterly Conference Call
ATS will hold its quarterly conference call at 10 a.m. eastern time
today. To listen to a live audio webcast of the call please visit
www.atsautomation.com.
Corporate Description
ATS Automation Tooling Systems Inc. (www.atsautomation.com) is the
industry's leading designer and producer of turn-key automated manufacturing
and test systems, which are used primarily by multinational corporations
operating in a variety of industries including: automotive,
computer/electronics, healthcare, and consumer products. The Company also
makes precision components and sub-assemblies using its own custom-built
manufacturing systems, process knowledge and automation technology. ATS
employs approximately 3,200 people at 26 facilities in Canada, the United
States, Europe and Asia-Pacific. The Company's shares are traded on The
Toronto Stock Exchange under the symbol ATA.
Certain forward looking statements are made in this news release,
including statements regarding possible future business. Investors are
cautioned that such forward-looking statements involve risks and
uncertainties, including, without limitation, continued acceptance of
ATS's products, technologies, customer requirements and other risks
detailed from time to time in ATS's periodic reports filed with Canadian
regulatory authorities.
ATS AUTOMATION TOOLING SYSTEMS INC.
Consolidated Statements of Earnings
(in thousands, except per share amounts - unaudited)
Fifty-two weeks ended Thirteen weeks ended
-------------------------------------------------------------------------
March 31, March 31, March 31, March 31,
2002 2001 2002 2001
-------------------------------------------------------------------------
Revenue $549,547 $678,972 $130,426 $192,049
Operating costs and expenses:
Cost of revenue 436,821 515,848 106,256 143,825
Depreciation and
amortization 27,457 22,956 7,623 6,637
Selling and administrative 65,662 66,222 16,010 19,655
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529,940 605,026 129,889 170,117
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Earnings from operations 19,607 73,946 537 21,932
Other expenses (income):
Interest on long-term debt 2,172 3,727 336 921
Interest income (2,019) (3,172) (330) (1,015)
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153 555 6 (94)
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Earnings before income taxes,
non-controlling interest
and goodwill amortization 19,454 73,391 531 22,026
Provision for income taxes 6,499 25,273 170 7,631
Non-controlling interest in
earnings of subsidiaries 362 404 169 259
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Earnings before goodwill
amortization 12,593 47,714 192 14,136
Goodwill amortization,
net of tax - 1,523 - 387
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Net earnings $ 12,593 $ 46,191 $ 192 $ 13,749
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Net Earnings per share:
(note 2)
Basic $ 0.21 $ 0.79 $ 0.00 $ 0.23
Diluted $ 0.21 $ 0.77 $ 0.00 $ 0.23
Weighted average number
of shares:
Basic 60,261 58,792 60,311 60,019
Diluted 61,023 59,906 60,995 60,915
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See accompanying notes to the consolidated financial statements
ATS AUTOMATION TOOLING SYSTEMS INC.
Consolidated Statements of Retained Earnings
(in thousands of dollars - unaudited)
Fifty-two weeks ended Thirteen weeks ended
-------------------------------------------------------------------------
March 31, March 31, March 31, March 31,
2002 2001 2002 2001
-------------------------------------------------------------------------
Retained earnings, beginning
of period $190,316 $147,452 $202,717 $176,567
Net earnings 12,593 46,191 192 13,749
Cost of issuance of common
shares, net of future
income taxes - (3,327) - -
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Retained earnings,
end of period $202,909 $190,316 $202,909 $190,316
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See accompanying notes to the consolidated financial statements
ATS AUTOMATION TOOLING SYSTEMS INC.
Consolidated Statements of Cash Flows
(in thousands of dollars - unaudited)
Fifty-two weeks ended Thirteen weeks ended
-------------------------------------------------------------------------
March 31, March 31, March 31, March 31,
2002 2001 2002 2001
-------------------------------------------------------------------------
Cash Flows from Operating
Activities:
Net earnings $ 12,593 $ 46,191 $ 192 $ 13,749
Items not involving cash 31,475 28,452 6,842 6,391
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Cash flow from operations 44,068 74,643 7,034 20,140
Change in non-cash operating
working capital 49,885 (66,332) 38,744 (2,393)
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93,953 8,311 45,778 17,747
Cash Flows from Investing
Activities:
Acquisition of businesses
(note 3) (5,317) (14,711) - (2,390)
Acquisition of fixed assets (29,695) (82,435) (8,731) (32,161)
Investments and other (15,965) (7,900) (6,455) (934)
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(50,977) (105,046) (15,186) (35,485)
Cash Flows from Financing
Activities:
Bank indebtedness (3,500) (24,693) 2,072 925
Long-term debt - (406) - -
Issuance of common shares 786 118,086 97 314
Other 70 10,452 (2,413) 7,680
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(2,644) 103,439 (244) 8,919
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Increase (decrease) in cash
and short-term investments 40,332 6,704 30,348 (8,819)
Cash and short-term
investments, beginning
of period 72,949 66,245 82,933 81,768
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Cash and short-term
investments, end of period $113,281 $ 72,949 $113,281 $ 72,949
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Supplementary information:
Cash income taxes paid $ 7,913 $ 24,763 $ 2,268 $ 1,562
Cash interest paid $ 2,472 $ 3,600 $ 341 $ 1,790
See accompanying notes to the consolidated financial statements
ATS AUTOMATION TOOLING SYSTEMS INC.
Consolidated Balance Sheets
(in thousands of dollars - unaudited)
-------------------------------------------------------------------------
March 31, March 31,
2002 2001
-------------------------------------------------------------------------
ASSETS
Current assets:
Cash and short-term investments $113,281 $ 72,949
Accounts receivable 113,704 152,266
Income taxes recoverable 11,140 1,051
Costs and earnings in excess of billings
on contracts in progress 104,320 150,363
Inventories 60,712 52,230
Other 3,114 2,329
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406,271 431,188
Fixed assets 212,009 205,733
Goodwill and other intangibles 67,465 57,306
Other assets 31,624 18,580
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$717,369 $712,807
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LIABILITIES AND SHAREHOLDER'S EQUITY
Current Liabilities:
Bank indebtedness $ 3,108 $ 4,079
Accounts payable and accrued liabilities 65,434 79,222
Billings in excess of costs and earnings
on contracts in progress 12,481 20,992
Future income taxes 27,455 21,281
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108,478 125,574
Long-term debt 53,860 53,279
Future income taxes 2,196 4,568
Non-controlling interest 2,957 2,585
-------------------------------------------------------------------------
Shareholders' equity:
Share capital 329,660 323,324
Retained earnings 202,909 190,316
Cumulative translation adjustment 17,309 13,161
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549,878 526,801
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$717,369 $712,807
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See accompanying notes to the consolidated financial statements
ATS AUTOMATION TOOLING SYSTEMS INC.
Notes to Interim Consolidated Financial Statements
(tabular amounts in thousands of dollars - unaudited)
1. Significant accounting policies:
(a) The accompanying unaudited interim consolidated financial
statements are prepared in accordance with accounting principles
generally accepted in Canada and are consistent with those described
in the annual consolidated financial statements for the year ended
March 31, 2001. The unaudited financial statements and notes
presented in this interim report should be read in conjunction with
the audited consolidated financial statements in the Company's fiscal
2001 Annual Report and the audited consolidated financial statements
which will be in the Company's fiscal 2002 Annual Report.
(b) Contract revenue in the Automation Systems segment is recognized
using the percentage of completion method. The degree of completion
is determined based on costs incurred, excluding costs that are not
representative of progress to completion, as a percentage of total
costs anticipated for each contract. Incentive awards, claims or
penalty provisions are recognized when such amounts can reasonably be
determined. Complete provision is made for losses on contracts in
progress when such losses first become known. Revisions in cost and
profit estimates, which can be significant, are reflected in the
accounting period in which the relevant facts become known.
2. Accounting policy changes:
(a) Effective April 1, 2001, the Company adopted the new accounting
Recommendations of the Canadian Institute of Chartered Accountants
("CICA") for earnings per share. The new Recommendations
substantially harmonize Canadian standards with existing U.S. and
International standards. For the year ended March 31, 2001, the
earnings per share figures in the Consolidated Statement of Earnings
have been recalculated using the new Recommendations. For the year
ended March 31, 2001 diluted earning per share increased from the
previously reported 76 cents to 77 cents when calculated using the
new Recommendations. For the three months ended March 31, 2001
diluted earnings per share increased from the previously reported 22
cents to 23 cents when calculated using the new Recommendations.
(b) Effective April 1, 2001, the Company adopted the new accounting
Recommendations of the CICA for goodwill and other intangible assets.
The new Recommendations require the Company to discontinue the
amortization of goodwill and instead, apply an impairment test at
least on an annual basis. Under the requirements of the impairment
test, the carrying value of the Company's reporting units, including
goodwill, is compared with the fair value of the reporting units.
Where the carrying value of a reporting unit exceeds its fair value,
the second step of the impairment test is carried out, whereby the
implied fair value of that reporting unit's goodwill is compared to
its carrying value to determine the amount of impairment loss.
Management has determined that there is no impairment in goodwill as
of March 31, 2002. Had this new standard been retroactively applied,
net earnings for the year ended March 31, 2001 would have increased
by $1,523,000 (2 cents per share basic and 3 cents per share diluted)
and net earnings for the three months ended March 31, 2001 would have
increased by $387,000 (1 cent per share basic and nil cents per share
diluted). The new Recommendations are only to be applied
prospectively.
3. Acquisitions:
Effective June 2001, the Company acquired all of the outstanding
shares of Omex Inc., a metal forming company located in Stratford,
Ontario.
The acquisition has been accounted for using the purchase method with
the results of operations being included from the date of
acquisition. The net assets acquired at their assigned values and the
consideration given for the acquisition is as follows:
Assets acquired $ 5,155
Liabilities assumed (3,679)
Goodwill 9,394
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$ 10,870
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Consideration:
Cash $ 5,317
Common shares 5,553
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$ 10,870
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4. Segmented disclosure:
The Company evaluates performance based on two reportable segments:
Automation Systems and Precision Components. The Automation Systems
segment produces custom-engineered turn-key automated manufacturing
and test systems. The Precision Components segment is a high volume
manufacturer of photovoltaic products, plastic and metal components
and sub-assemblies.
The Company accounts for inter-segment sales at current market rates,
negotiated between the segments.
Fifty-two weeks ended Thirteen weeks ended
---------------------------------------------------------------------
March 31, March 31, March 31, March 31,
2002 2001 2002 2001
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Revenue
Automation Systems $393,739 $525,745 $ 86,785 $152,867
Precision Components 164,758 156,350 46,510 41,050
Elimination of inter-
segment revenue (8,950) (3,123) (2,869) (1,868)
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Consolidated $549,547 $678,972 $130,426 $192,049
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Operating Income
Automation Systems $ 24,468 $ 75,285 $ (689) $ 23,622
Precision Components 3,259 4,671 3,489 659
Inter-segment elimination
and other corporate
expenses (8,120) (6,010) (2,263) (2,349)
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Consolidated $ 19,607 $ 73,946 $ 537 $ 21,932
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5. Cyclical nature of the business:
Interim financial results are not necessarily indicative of annual or
longer term results, because many of the individual markets served by
the Company tend to be cyclical in nature. General economic trends,
product life cycles and product changes may impact Automation Systems
bookings, Precision Components volumes, and the Company's earnings in
any of its markets.
>>
%SEDAR: 00002017E
For further information: Ron Jutras, Chief Financial Officer, (519) 653 6500 To request a free copy of this organization's annual report, please go to http://www.newswire.ca and click on reports@cnw.
© 2002 Canada Newswire Ltd.