ATS Corporation Common Shares

Good morning, ladies and gentlemen. Welcome to the ATS Automation 4th Quarter Conference Call and Webcast. This call is being recorded today, May 19, 2022, at 8.30 a.m. Eastern Time. Following the presentation, we will conduct a question and answer session, and instructions will be provided at that time for you on how to queue up. If anyone has difficulties hearing the conference, please press star zero at any time for operator assistance. I would now like to turn the call over to Mr. David Galison, Head of Investor Relations at ATS. Please go ahead, sir.

Thank you, operator, and good morning, everyone. On the call today are Andrew Heider, Chief Executive Officer of ATS, and Ryan McLeod, Chief Financial Officer. Please note that our remarks today are accompanied by a slide deck, which can be viewed via our webcast and available at atsautomation.com. We caution that the statements made on our webcast and conference call may contain forward-looking information, and our cautionary statement regarding such information, including the material factors that could cause actual results to differ materially from the statements, and the material factors or assumptions applied in making these statements, are detailed on slide 2 of the slide deck. Now it's my pleasure to hand over the call to Andrew.

Thank you, David. Good morning, ladies and gentlemen, and thank you for joining us. We're pleased to report another quarter of profitable growth for ATS, featuring record revenues, strong order bookings and order backlog, and continued adjusted EBIT margin expansion. Despite challenges in the global business environment, The year as a whole saw ATS produce double digit organic revenue growth while achieving on target contributions from newly acquired businesses. All of this reflected good execution of the ABM playbook by dedicated and resilient ATS teams worldwide. As part of our expand strategy, integration activities with all our recent acquisitions continued in Q4 and we completed the acquisition of HSG. Today, I will update you on our business, and then Ryan will provide his financial report. Starting with our financial value drivers, Q4 revenues were a record, $603 million, up 51% from Q4 last year. Driven by a combination of acquired businesses and continued strength across our core operations. Organically, revenues grew 11% year over year. For the full year, total revenues were up 53%, including 20% from organic growth. Q4 order bookings were $638 million, up 38% year over year. Bookings were strong across most market verticals in Q4, and featured key wins within life sciences, consumer, transportation, and food. For the full year, bookings are up by 51%, driven by acquired businesses. Our adjusted EBIT margin for the quarter was 14.2%, representing margin expansion of 183 basis points from Q4 last year, with strong sequential and full year margin expansion as well. Moving to our outlook, we finished with a 1.4 billion order backlog that includes several large enterprise programs that have longer durations. Our backlog is distributed across diversified regulated industries where quality and reliability are mandatory. The size and composition of backlog provides us with a solid base of business as we head into a new fiscal year. By market, conditions remain generally positive in life sciences, with good activity level in our key sectors of medical devices, pharma, and radiopharma. Life sciences represented more than 50% of our ending backlog, and we expect it to remain a key vertical for ATS. In EV, We remain bullish as OEMs accelerate their investment plans. We received several additional orders for battery assembly systems during the quarter. Our experience and successful track record position us well as new complexities arrive from evolving battery technologies. In food and beverage, we continue to see orders across both processing and packaging. Key drivers include a strong tomato season. demand for primary and secondary processing, and a need for automation and processing technology due to labor shortages specifically in North America and Europe. In consumer, we're seeing ongoing activity in warehouse automation, as well as increased order intake from cosmetics customers during the quarter, a market which was particularly hit hard by pandemic-related effects. In energy, There is ongoing interest in nuclear power and grid battery storage to support green energy initiatives, and we're focused on funnel development in these areas. And after sales services, we have continued to expand our regional networks, and we're now providing local support to some of the customers of our recent acquisitions, such as SP, Marco, and CFT. This is a good start on our journey to increase value for acquired customers and share of wallet for ATS. We are progressing in our digital journey to develop combined technologies and service solutions to meet our customers' challenges on the shop floor. By way of example, we recently helped a customer drive better value out of Illuminate by analyzing their data to identify areas for immediate support, which drove a significant OEE improvement. In addition, Based on knowledge generated from the data, we are now providing ongoing support to the customer through health checks, upgrades, and a service level agreement with future potential to expand to other equipment and higher value services. Next, I would like to address some of the macro issues facing the markets. In Ukraine, ATS is a small operation that serves as an internal supplier with 70 valued employees. We are maintaining regular contact and supporting our team, and we have made a donation to the Red Cross. Our donation is being used to fund mobile health teams, families displaced by the war, and emergency basic needs. Our thoughts are with those affected by this tragic situation. Relative to the pandemic, in many geographies, we've seen restrictions that were implemented in the early days of the pandemic lifted or reduced, but the situation remains fluid. We are working with our customers and employees to monitor the situation and address the challenges. Despite the difficulties and Q4 absenteeism in some geographies, our teams maintain their focus on delivering world-class performance for our customers. Inflation, supply chain constraints, and competition for talent represent ongoing challenges. The situation remains dynamic for ATS and for our customers. Through the effort of our teams and the deployment of our ABM to date, we've had a good level of success in mitigating some of these challenges. However, we're not immune. That said, ATS is ideally positioned to assist our global customers with automation solutions that will strengthen their global supply chains and reduce both production costs and labor dependence. To summarize our outlook, this quarter included strong order bookings, order backlog, and a solid opportunity funnel. We remain encouraged by recent activity levels, while at the same time recognizing that this is a complex and volatile business environment with heightened risks to order intake timing and operational execution. Our teams remain focused on problem-solving efforts to identify effective countermeasures to mitigate the effects with special ongoing attention to supply chain, assisted as always by our continuous improvement playbook, our ABM. Moving to ABM highlights. During the quarter, we held our annual week-long set of President's Kaizen events, attended by our senior business leaders and employees from across the organization. This year, the President's Kaizens focus on both front-end sales and operational execution improvements. Two events focus on responding to supply chain challenges and one on engineering efficiency. The remaining three events targeted value selling, capture rate improvement, and finally, optimizing sales processes across three acquired businesses, Coma Chair, SP, and DF. Our EV team held a joint Kaizen workshop with General Motors to enhance machine throughput and support customer growth. Many SP team members participated in their first virtual boot camp, where they learned and applied ABM fundamentals. As a result, 10 problem-solving and Kaizen events were planned at SP for April and May as we roll out our ABM playbook. We will continue to employ our global ABM boot camps in fiscal 2023. We are proud of the ongoing demand for and commitment to these boot camps. On M&A, Acquisitions in strategic markets are an important complement to ATS's organic growth, market penetration, and customer capabilities. During the fourth quarter, we completed the acquisition of HSG Engineering. HSG is an industrial automation integrator primarily serving the pharmaceutical sector. HSG joined ATS's PA business to deepen its domain knowledge in the biopharma and pharmaceutical sectors and strengthen PA's regional presence in Italy. With a strong balance sheet, ATS will cultivate and evaluate acquisition opportunities consistent with our proven strategy. Naturally, timing of acquisitions will be variable and our approach to deploying our balance sheet will be disciplined and strategic. Of note, we continue to make progress integrating our acquired businesses. There is strong collaboration as we explore opportunities to grow our support and integrate service activities. Across ATS, our innovation activities are an ongoing part of our expand strategy. Globally, the team made solid progress in a number of areas. Our SuperTrac team continued to build the conveyance portfolio to enhance SuperTrac's potential in the life sciences and pharma industries. At our ATS Innovation Center in Cambridge, the team maintained its research collaboration with the University of Waterloo. In addition, the team developed new applications using the Symphony platform, including a system for syringe production. BioDot has developed new techniques for forming Lyo beads based on the BioDot dispensing technology, which may open up synergies with SP, although this is still in early stages. Coma Chair continues to innovate and build on its strong portfolio of technology used in the production of a new radioisotope that is showing strong potential as a breakthrough in radiopharmaceutical cancer treatment. Our EV team remains focused on development of its battery assembly platform with innovations that increase throughput and yield through the early identification of defective battery cells in the assembly process. In summary, we are pleased with the results of the quarter and fiscal year as they demonstrate the strength and growth of our portfolio and offerings and the resiliency of our global teams. Our commitment to providing best-in-class solutions to our customers is evident in strong order bookings and robust order backlog. Our strong leadership team remains focused in our dedication to our employees, our customers, and to creating value for our shareholders. Our global teams did an excellent job in what was a very challenging environment, delivering strong results in fiscal 22. I am thankful for and proud of their efforts and continued commitment. Now I'll turn the call over to Ryan. Ryan, over to you.