ATS reports first quarter results, automation systems
backlog and bookings up sharply from year-end
TSE Symbol: ATA
TSX: ATA
CAMBRIDGE, ON, Aug. 14 /CNW/ - ATS Automation Tooling Systems Inc. today
reported net earnings of $4.1 million (7 cents per share basic and diluted)
for the three months ended June 30, 2002 - a solid improvement over the muted
but profitable performance of the last three quarters - along with sharp gains
in automation systems backlog and bookings since year-end.
"This more positive performance is the product of an aggressive pursuit
of new business by all ATS divisions worldwide and our ability to turn the
first hint of economic renewal into a strong volume of new automation systems
orders," said Klaus Woerner, ATS President and Chief Executive Officer. "We
are particularly satisfied with the growth of our automation systems backlog
since year-end, which sets the stage for better performance this fiscal year,
as well as the results of our Photowatt solar operations, which achieved its
fourth consecutive quarter of profitability. In this fragile economic
environment, ATS is winning important assignments and gathering momentum in
targeted new markets that will enhance our prospects once the recovery in
customer capital spending takes firm hold."
First Quarter Fiscal 2003 Highlights
- Net earnings were $4.1 million (7 cents per share basic and diluted)
versus $10.9 million (18 cents per share basic and diluted) in the
first quarter a year ago. Per share earnings are well ahead of diluted
EPS of 0 cents per share in the fourth quarter of fiscal 2002, 2 cents
per share in the third quarter and 1 cent in the second quarter last
fiscal year.
- Consolidated revenue was $143.7 million, down 12% from $162.7 million
in the first quarter a year ago, but 10% higher sequentially versus
the fourth quarter of fiscal 2002.
- New automation systems bookings of $128.0 million, up 16% from
$110.4 million in the first quarter a year ago and 36% ahead of
$94.2 million in the preceding quarter.
- Quarter end automation systems backlog was $189.0 million, 12.3% ahead
of backlog of $168.3 million at March 31, 2002, but off 5.1% from the
level of $199.2 million at June 30, 2001.
- ATS's cash on hand remained very strong at $113 million versus
$76 million at June 30, 2001.
Revenue Analysis
ATS revenue remained well diversified by region, industrial market and
customer in the first quarter, reflecting one of the Company's key strengths.
This diversification has enabled ATS to remain profitable over the past 18
months by mitigating the effects of the broad-based downturn in capital
spending. Segmented revenue shows:
- Automation Systems Group revenue was $107.0 million, 14% lower than
in the first quarter a year ago, despite a 23% increase in revenue
derived from the automotive market. This solid growth was offset by
weak but improving conditions in the computer-electronics segment,
where revenue was off 36% and healthcare, where revenue was down 23%.
- First quarter automation systems revenue was sequentially 23% higher
than in the fourth quarter of fiscal 2002 with increases recorded in
all of the Company's industry sectors.
- Precision Components operations, excluding solar, reported revenue
growth of 5% to $30.2 million, reflecting the benefits of acquiring
Omex Inc. during the latter part of the first quarter a year ago.
- Photowatt International solar revenue was 20% lower at $8.7 million.
This decline is the direct result of the company's decision to remove
$3.1 million of product from a customer experiencing cash flow
difficulties. Excluding this product, which is being resold, solar
revenue increased 9% in spite of softer market conditions.
- Consolidated revenue in the Company's largest market of the US/Mexico
was 20% lower in the first quarter compared to the first quarter a
year ago reflecting challenging economic conditions. A 29% decline in
European revenue year-over-year, primarily as a result of lower solar
sales in the region, was more than offset by revenue growth in the
combined markets of Canada, Asia-Pacific and other regions.
<<
Consolidated Revenue by Region
($ millions)
13 weeks ended
6/30/2002 6/30/2001 3/31/2002
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Canada $ 17.2 $ 13.1 $ 16.5
U.S. & Mexico 86.2 107.1 70.4
Europe 21.0 29.6 25.5
Asia-Pacific 13.8 12.9 12.6
Other 5.5 - 5.4
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Total $ 143.7 $ 162.7 $ 130.4
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Revenue by Industry
($ millions)
13 weeks ended
6/30/2002 6/30/2001 3/31/2002
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Automation Systems:
Automotive $ 43.9 $ 35.6 $ 40.5
Computer-Electronics 37.2 58.0 25.6
Healthcare 17.6 22.7 15.3
Other 8.3 7.6 5.4
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Subtotal 107.0 123.9 86.8
Precision Components:
Automotive 27.7 27.1 27.7
Computer-Electronics 0.7 0.8 1.2
Solar 8.7 10.8 15.3
Other 1.8 0.8 2.3
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Subtotal 38.9 39.5 46.5
Intersegment Elimination (2.2) (0.7) (2.9)
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Total Consolidated
Revenue $ 143.7 $ 162.7 $ 130.4
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First Quarter Operating Results
Consolidated operating earnings were $5.9 million, compared to $16.4
million in the first quarter a year ago, reflecting the performance of the
Automation Systems Group.
Automation Systems Group reported operating earnings of $5.3 million
(5.0% margin) versus $16.9 million (13.6% margin) in the first quarter a year
ago. The Group's operating results continued to be impacted by revenue levels
and the resulting excess capacity versus the first quarter last year, as well
as higher expenses to support important new growth initiatives. However,
operating margins have improved substantially on a sequential basis compared
to the fourth quarter of last year, reflecting higher revenues, more
favourable overhead absorption and the absence of inventory writedowns.
Precision Components operating earnings increased 68% to $2.3 million
(5.9% margin), from $1.4 million (3.5% margin) in the same period of fiscal
2002. This year-over-year improvement reflected continued progress at
Photowatt, which achieved higher operating margin despite temporarily lower
sales and continuing softer solar market conditions. Photowatt has now been
profitable for four consecutive quarters.
Balance Sheet
ATS finished the quarter with a very strong balance sheet. Cash on hand
totaled $113 million at June 30, 2002 versus $76 million a year earlier and
unchanged from March 31, 2002. Period end debt to equity ratio remained a
healthy 0.1 to 1, unchanged from the ratio at March 31, 2002 and June 30,
2001.
Outlook
At June 30, 2002, automation systems order backlog was $189.0 million
compared to $168.3 million at March 31, 2002 and $199.2 million a year ago.
Automation Systems Backlog by Industry
($ millions)
6/30/2002 6/30/2001 3/31/2002
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Computer/Electronics $ 49.2 $ 71.3 $ 35.2
Automotive 90.9 60.9 79.3
Healthcare 35.2 57.8 38.2
Other 13.7 9.2 15.6
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Total $ 189.0 $ 199.2 $ 168.3
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New automation systems order bookings in the first quarter were $128.0
million, 16% higher than in the first quarter a year ago, and 36% higher than
in the preceding (fourth) quarter of fiscal 2002. Scope reductions in the
first quarter were $2.4 million. There were no order cancellations. Order
activity remained broadly based in the quarter.
"We've entered the second quarter with a robust backlog, which gives us a
good cushion of work on hand to offset the normal seasonality of our business
which occurs in this summer period," said Mr. Woerner. "What's more, the
assignments in hand are very diverse, which contributes to more even
distribution of work across our facilities. We're seeing particularly strong
activity in our Cambridge Automation Systems Division, in the southeast United
States and at ATS Munich facilities. The challenge is to re-build momentum in
our U.S. westcoast operations, which were impacted by the pronounced downturn
in computer-electronics. Our Precision Plastics and Metals facilities, along
with Omex are also moving forward nicely."
Despite this obvious uptick in automation systems bookings and backlog,
Mr. Woerner said ATS continues to be "cautiously optimistic about the
remainder of fiscal 2003.
"Our outlook for improving revenue and earnings this fiscal year remains
firmly intact. However, we believe it's prudent to keep our expectations in
check at this point. It's simply too early to tell if recent momentum will
translate into a broad and sustained advance. Certainly, first quarter
automation bookings add fuel to our optimism, but at the same time, we are
concerned about the state of the U.S. economy and its obvious influence over
customer capital spending and new product launches. As well, the summer
quarter tends to temporarily cloud the outlook because of summer plant
shutdowns and vacations."
At the same time, Mr. Woerner said, "our longer-term prospects look even
brighter. Our recent performance-enhancing initiatives are gaining traction. A
major manufacturer just qualified us to sell our advanced thermal technologies
for another one of their new computer products. Our next generation Spheral
Solar Power venture is rolling out according to plan. And we have very strong
prospects for new long-term assignments in our Precision Components
operations. These opportunities will complement the excellent long-term
potential of our industry-leading Automation Systems business, which continues
to broaden its client base and launch new and improved products that are
capturing customer attention in strategically targeted areas."
Subsequent Event
ATS also announced today it has just won a $5.6 million automation
systems order from a major multinational automotive components company. Said
Mr. Woerner: "This order is important because it includes some of our latest
standard automation technology, including Leantrak(TM) conveyance systems, ATS
component feeders, ATS Superbots(TM) and ATS high speed, pick and place
robots, all of which were instrumental in us winning this business. This one
order demonstrates the power of constant customer-focused innovation at ATS
and provides further validation of our standard automation products and
modules strategy."
Quarterly Conference Call
ATS will hold its quarterly conference call at 5 p.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. Through
Photowatt International S.A., and Spheral Solar Power Inc., ATS is an emerging
leader in the rapidly growing market for solar energy cells and modules. 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)
Thirteen weeks ended
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June 30, 2002 June 30, 2001
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Revenue $ 143,661 $ 162,727
Operating costs and expenses:
Cost of revenue 114,138 122,404
Depreciation and amortization 7,221 6,461
Selling and administrative 16,435 17,438
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137,794 146,303
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Earnings from operations 5,867 16,424
Other expenses (income):
Interest expense on long-term debt 312 760
Interest income (602) (741)
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(290) 19
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Earnings before income taxes and
non-controlling interest 6,157 16,405
Provision for income taxes 2,001 5,510
Non-controlling interest in earnings
of subsidiaries 28 26
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Net earnings $ 4,128 $ 10,869
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Net earnings per share:
Basic $ 0.07 $ 0.18
Diluted $ 0.07 $ 0.18
Weighted average number of shares:
Basic 60,378 60,128
Diluted 61,114 61,038
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See accompanying notes to consolidated financial statements.
Consolidated Statements of Retained Earnings
(in thousands of dollars - unaudited)
Thirteen weeks ended
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June 30, 2002 June 30, 2001
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Retained earnings, beginning of period $ 202,909 $ 190,316
Cumulative adjustment for change in
accounting policy (note 2) (4,177) (4,177)
Net earnings 4,128 10,869
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Retained earnings, end of period $ 202,860 $ 197,008
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See accompanying notes to consolidated financial statements.
ATS AUTOMATION TOOLING SYSTEMS INC.
Consolidated Balance Sheets
(in thousands of dollars - unaudited)
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June 30, 2002 March 31, 2002
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(as restated,
see note 2)
Assets
Current assets:
Cash and short-term investments $ 112,749 $ 113,281
Accounts receivable 112,543 113,704
Income taxes recoverable 3,812 11,140
Costs and earnings in excess of billings
on contracts in progress 103,992 104,320
Inventories 70,441 60,712
Other 3,870 3,114
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407,407 406,271
Fixed assets 209,946 212,009
Goodwill 56,137 57,974
Other intangibles 9,204 9,491
Other assets 30,680 27,447
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$ 713,374 $ 713,192
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Liabilities and Shareholders' Equity
Current liabilities:
Bank indebtedness $ 3,461 $ 3,108
Accounts payable and accrued liabilities 68,708 65,434
Billings in excess of costs and earnings
on contracts in progress 11,539 12,481
Future income taxes 25,969 27,455
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109,677 108,478
Long-term debt 51,248 53,860
Future income taxes 646 2,196
Non-controlling interest 2,937 2,957
Shareholders' equity:
Share capital 330,466 329,660
Retained earnings 202,860 198,732
Cumulative translation adjustment 15,540 17,309
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548,866 545,701
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$ 713,374 $ 713,192
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See accompanying notes to consolidated financial statements.
ATS AUTOMATION TOOLING SYSTEMS INC.
Consolidated Statements of Cash Flows
(in thousands of dollars - unaudited)
Thirteen weeks ended
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June 30, 2002 June 30, 2001
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Cash flows from operating activities:
Net earnings $ 4,128 $ 10,869
Items not involving cash 5,077 10,059
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Cash flow from operations 9,205 20,928
Change in non-cash operating working capital 1,186 5,301
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10,391 26,229
Cash flows from investing activities:
Acquisition of interest in subsidiaries - (5,317)
Acquisition of fixed assets (2,664) (7,557)
Investments and other (3,974) (1,653)
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(6,638) (14,527)
Cash flows from financing activities:
Bank indebtedness 353 (4,175)
Issuance of common shares 806 558
Other (5,444) (5,028)
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(4,285) (8,645)
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Increase (decrease) in cash (532) 3,057
Cash and short-term investments,
beginning of period 113,281 72,949
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Cash and short-term investments,
end of period $ 112,749 $ 76,006
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Supplementary information:
Cash income taxes paid $ 2,360 $ 258
Cash interest paid $ 376 $ 431
See accompanying notes to consolidated financial statements.
ATS AUTOMATION TOOLING SYSTEMS INC.
Notes to Interim Consolidated Financial Statements
(tabular amounts in thousands of dollars - unaudited)
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1. Significant accounting policies:
(a) The accompanying unaudited interim consolidated financial
statements are prepared in accordance with accounting principles
generally accepted in Canada and the accounting policies are
consistent with those described in the annual consolidated financial
statements for the year ended March 31, 2002, except as described in
note 2. The unaudited interim consolidated financial statements
presented in this interim report do not conform in all respects to the
requirements of generally accepted accounting principles for annual
financial statements and should be read in conjunction with the
audited consolidated financial statements 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, 2002, the Company retroactively adopted the new
Recommendations of the Canadian Institute of Chartered Accountants
("CICA") related to foreign currency translation. The new
Recommendations require gains and losses on the translation of long-
term monetary assets and liabilities to be included in income.
Previously, such gains and losses were deferred and amortized over the
life of the respective asset or liability. Retroactive adoption of
this policy had no material impact on net earnings for the quarter
ended June 30, 2001 or the year ended March 31, 2002 and as such have
remained as previously reported. The retroactive changes to the
consolidated balance sheet at March 31, 2002 and March 31, 2001 are as
follows:
Decrease in other assets $ 4,177
Decrease in retained earnings $ 4,177
(b) Effective April 1, 2002, the Company prospectively adopted the new
Recommendations of the CICA for Stock-based Compensation and Other
Stock-based Payments. The new Recommendations establish standards for
the recognition, measurement and disclosure of stock-based
compensation and other stock-based payments. The new standards only
apply to awards granted after the adoption date. The Company has
elected to continue accounting for the stock options by calculating
compensation cost based on the intrinsic value of the award at the
date of grant, and to disclose pro forma net earnings and earnings per
share information using the fair value based method. As a result, the
adoption of the Recommendations had no effect on the Company's
reported earnings for the three months ended June 30, 2002 - see
note 3.
3. Stock-Based Compensation:
In accordance with the CICA recommendations, the following pro forma
disclosures present the compensation cost for the Company's stock
option plan had compensation cost been determined and recorded in the
statement of earnings and earnings per share based on the fair value
at the grant date of the options awarded on or after April 1, 2002:
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Net Basic Diluted
earnings earnings per share earnings per share
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As reported $ 4,127 $ 0.07 $ 0.07
Pro forma 3,912 0.06 0.06
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In the pro forma results above, the fair values of the Company's stock
option grants were estimated using the Black Scholes option pricing
model with the following assumptions: risk free interest rate 5.4%;
dividend yield of 0%; expected lives of 6.0 years; and volatility of
42%, and the total estimated compensation cost related to the 471,495
options granted during the quarter ended June 30, 2002 was amortized
over the five year vesting period of the options.
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.
Thirteen weeks ended
Revenue June 30, 2002 June 30, 2001
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Automation Systems $ 107,029 $ 123,934
Precision Components 38,911 39,470
Elimination of inter-segment revenue (2,279) (677)
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Consolidated $ 143,661 $ 162,727
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Operating Income
Automation Systems $ 5,331 $ 16,887
Precision Components 2,295 1,363
Inter-segment elimination and
other corporate expenses (1,759) (1,826)
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Consolidated $ 5,867 $ 16,424
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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.