ATS Corporation Common Shares

Good morning, ladies and gentlemen. Welcome to the ATS Automation fourth quarter conference call and webcast. This call is being recorded on May 20th, 2021 at 830 a.m. Eastern Time. Following the presentation, we will conduct a question and answer session. Instructions will be provided at that time for you to queue up for questions. If anyone has difficulties hearing the conference, please press star followed by zero for operator assistance at any time. I'd now like to turn the call over to Shireen Sahawi, Director of Investor Relations at ATS. Please go ahead.

Thank you, Operator, and good morning, everyone. Your main hosts today are Andrew Heider, Chief Executive Officer of ATS, and Ryan McLeod, Chief Financial Officer. For those who joined us by phone, our remarks are accompanied by a slide deck, which is available at ATSautomation.com. Before we begin, I am required to provide the following statement respecting forward-looking information, which is made on behalf of ATS and all its representatives on this call. We are cautioned that the oral statements made on this call will contain forward-looking information that involves rich and uncertainties. including those introduced by the COVID-19 pandemic. The actual results differ materially from the conclusion forecast or projections in the forward-looking information. Certain material factors or assumptions were applied in drawing a conclusion or making a forecast or projection as reflected in the forward-looking information. Additional information about the material factors that could cause actual results to differ materially from the conclusion, forecast, or projection in the forward-looking information and the material factors or assumptions that were applied in drawing a conclusion or making a forecast or projection as reflected in the forward-looking information are contained in APS's filings with the Canadian Provincial Securities Regulator. Now, it's my pleasure to turn the call over to Andrew. Thank you, Shireen.

Good morning, ladies and gentlemen, and thank you for joining us. We are pleased to report another strong quarter for HS, including record order bookings and backlog. After a challenging start to our fiscal year brought on by the COVID-19 pandemic, our business rebounded nicely over the balance of the year. The fourth quarter marked the return to positive organic revenue growth, and we continued to drive margin expansion in line with our long-term plan. During the quarter, we also announced a successful completion of the tender offer to acquire CFT, a global supplier of automated processing and packaging equipment to the food and beverage industry. The transaction closed in late March, and our teams have started the integration work. We are excited to introduce a food technology platform at ATS and look forward to offering innovative solutions to meet our customers' needs. Today, I will update you on business conditions and then Ryan will provide his report. Starting with our financial value drivers. Q4 revenues were $400 million, up 4.7 from Q4 last year and up 8.2% sequentially. driven by broad-based activity levels. Organically, revenue grew 5.4% in the quarter. For the full year, our revenues of $1.43 billion were in line with last year's revenues. Q4 order bookings were $463 million, up 30% from last year, and up 6% sequentially. Bookings were strong across most segments, with large customer awards in life sciences and transportation. Bookings for the year were 1.6 billion, up 11% year-over-year, driven by large awards in life sciences and consumer products. Our adjusted EBIT margin for the quarter was 12.4%, representing over a 200 basis point margin expansion versus Q4 of last year, and over 50 basis point margin expansion sequentially. For fiscal 2021, our adjusted EBIT margin 11.4% represented a 40 basis point margin expansion versus last year's margins. Moving to our outlook, our healthy backlog of over 1 billion provides us with a solid base of business and good revenue visibility. We are encouraged with the pace of vaccine rollouts in many of our global markets. However, for the time being, We continue to operate in a COVID-19 environment with the inefficiencies that it entails. Our teams have made meaningful progress adapting to this new normal, and we are pleased by recent order activity. We continue to closely monitor customer demand signals and are seeing activities pick up in some areas. By market, conditions and life sciences are positive with broad-based strength in medical devices, pharma, and radiopharma. During the quarter, we won a number of mandates related to COVID-19, demonstrating the strength of our life sciences franchise and helping in the global fight against the pandemic. This work represented around 34% of our life sciences bookings and 19% of our total bookings in Q4 and covered awards in point of care diagnostics, vaccine syringes, and diagnostic kits. We're also seeing the return of more traditional non-COVID-related opportunities in the funnel. Our focus on innovation and differentiated solutions is bearing fruit with new customer wins and higher share of wallet with existing accounts. Life Sciences represented 60% of our annual bookings, and we expect it will be a strong market for ATS for years to come. In EV, we're seeing activity levels improve with a number of traditional OEMs and newcomers recently announcing plans for electrical fleets. We continue to be focused on the right opportunities and won a large award in the quarter. ATS has a long track record and proven expertise in battery assembly and tests, and we look forward to supporting our customers' EV fleet goals. In consumer, similar to last quarter, we saw strength in warehouse automation and food, while cosmetics remained soft. In energy, we continue to serve our customers in areas of refurbishment and decommissioning, with strong execution and good line of sight to future opportunities in Canada and globally. On after-sales services, order booking showed sequential improvement, and revenues were up double digits versus last year and stable sequentially, with strength across all market verticals. Given the ongoing COVID-19 travel restriction in many geographies, we continue to rely on our regional service networks and the use of digital support tools. We see additional opportunities to refine our aftermarket services to drive a better customer experience and are nearing completion on a digital commerce initiative to further enhance our digital value proposition. To summarize our outlook, bookings were strong this quarter. and our funnel remains healthy. While the pandemic environment continues to introduce some timing and approval uncertainty around capital deployment by our customers, we are encouraged by the recent pickup in activity levels. Moving to the ABM, our continuous improvement playbook. We are making progress by using virtual means to train and hold events. During the quarter, we held our annual President's Kaizen. which is a week-long event attended by our senior business leaders. We also launched our first global virtual ABM boot camp. A few ABM highlights from the quarter. We held over 10 Kaizens across various ATS divisions. These events drove improvements in multiple areas, including sales, operations, and customer service. One division in our life sciences group was able to achieve greater standardization of parts and components with a tenfold increase in the number of standard parts identified and a 10% increase in supplier rebates. The approach is being replicated at other life sciences divisions. Our ATS products group was able to develop a process to reduce lead times from approximately 12 weeks to eight weeks. The team identified efficiency opportunities in our procurement and production processes, as well as scheduling and capacity planning. The team is on track to achieve the new lead time by July of this year. Our industrial automation team hosted its first Kaizen with a customer, designed to achieve a meaningful reduction in the project timeline. The event was a big success, resulting in a number of opportunities that ATS and the customer are jointly developing. We launched our first virtual ABM boot camp, which runs over a six-week period and combines self-paced learning with real-time discussions with ABM leaders. The first session wrapped up in April with over 50 participants and positive reception. The new format enables us to continue scaling the training and demonstrates how businesses across ATS are using the ABM to deliver tangible results. Turning to innovation, we continue to prioritize investments in differentiated solutions that positively impact our customers. During the quarter, our industrial automation division applied the ABM principles to establish new processes to improve product innovation and drive agile product development. This resulted in the team filing several new patents related to growing areas of our business. In addition, teams across ATS are pursuing next generation ideas in areas including linear motion technology, digital services, and modular flexible manufacturing, just to name a few. On M&A, acquisitions continue to be an important complement to ATS's organic growth. Late in the fourth quarter, we welcome CFT to the ATS family. CFT serves as a platform for ATS in the food and beverage industry and joins ATS's other food business, Marco, to comprise a food technology group. This group is headed by Jeremy Patton, an accomplished ATS veteran. Subsequent to the quarter, we announced the acquisition of BioDot, which we expect to close in calendar Q2. BioDot expands our life sciences capabilities in precise, low volume, fluid dispensing, and enhances our position in the point of care and clinical diagnostic lab and markets. We will continue to cultivate and evaluate acquisition opportunities consistent with our proven strategy. Of course, Timing of acquisitions will be variable and our approach to deploying our balance sheet will be disciplined and strategic. In summary, fourth quarter results highlighted the strength of our business and our ability to pivot and adapt operations to the current climate. Record booking activity reflected the alignment we have with our customers in providing best-in-class solutions. Going forward, Our focus remains on sharpening our execution to the application of the ABM playbook to drive better performance. Our strong backlog provides good revenue visibility, while our healthy balance sheet enables us to act opportunistically when strategic prospects arise. We look forward to closing the BioDOT acquisition and finding more avenues to create value for our customers and our shareholders. Now I will turn the call over to Ryan. Ryan?