ATS Corporation Common Shares

Good morning, ladies and gentlemen. Welcome to the ATS Automation First Quarter Conference Call and Webcast. This call is being recorded on August 10th, 2022 at 8.30 a.m. Eastern Time. Following the presentation, we'll 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 the star followed by the zero for operator assistance at any time. I'll now turn the call over to David Galison, Head of Investor Relations at ATS.

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 etsautomation.com. We caution that the statements made on the 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 the statement, are detailed in slide two of the slide deck. Now, it's my pleasure to turn the call over to Andrew.

Thank you, David. Good morning, ladies and gentlemen, and thank you for joining us. Today, ATS reported another quarter of profitable year-over-year growth. This quarter also featured record revenues, order bookings, and order backlog, all delivered in a challenging and fluid economic and business environment. Our results reflect our focus on strategic markets and the ongoing application of the ABM Playbook by our dedicated global teams. As part of our expanded strategy, integration activities progressed with all of our acquisitions from last year, and we remain on target with our goals. Today, I will update you on the business, and Ryan will provide his financial report, starting with our financial value drivers. Q1 revenues were a record $611 million, up 20% from last year, driven by a combination of acquired businesses and continued strength across our core operations. Organic revenue growth was 6% year over year. Order bookings for the quarter were $736 million, up 16% year over year. and featured key wins in both life sciences and transportation. Our adjusted EBIT margin in Q1 was 14.3%. Moving to our outlook. We finished with approximately $1.6 billion of order backlog that includes several large enterprise programs with long durations, providing a solid base of business. Our backlog remains distributed across diversified regulated industries where quality and reliability are mandatory. By market, in life sciences, conditions have remained generally positive with good activity in key sub-markets including medical devices as well as pharma and radiopharma. Life sciences represents nearly 50% of our ending backlog and it remains a key vertical for ATS. In EV, OEMs continue to drive their investment plans forward. We expect ongoing demand for EV automation as global capacity at OEMs is well below the levels required to meet the stated production targets. Despite strong growth to date, the EV industry is in the early stages of its investment cycle. During the quarter, we received an initial 70 million US dollar EV order from an existing global automotive customer for battery assembly systems in their Canadian and U.S. manufacturing operations. This order is part of a multi-phase enterprise program. The OEM selection of ATS as its trusted partner to support their EV strategy demonstrates our expertise and successful track record as an industry leader in delivering solutions to address evolving battery technologies. In food and beverage, We continue to see requests for increased automation. Demand for our Apollo evaporators and other energy-efficient products remains strong, and we're seeing more projects and opportunities in food and liquid food and a pickup in beverage. In energy, high energy costs and a heightened focus on emissions supports ongoing interest in nuclear power. We are also seeing growing demand for grid battery storage as renewables are playing a more significant role. ATF is positioned to participate in both areas. In consumer, we're seeing an ongoing recovery in the personal care and cosmetic sector, which was particularly hit hard by pandemic-related effects. In services, we further evolved our lifecycle portfolio. As an example, in Q1, we refreshed our integrated bundles, which are designed to increase customer touchpoints and generate recurring revenue. We're driving continued collaboration and execution of the aftermarket strategy across all parts of our business, including acquired businesses. Teams are focused on leveraging our regional networks for customer support, as well as exploring the use of Illuminate and other tools to enable digital insights and capabilities. Costs and wage inflation, supply chain constraints, and the ability to attract and retain high-end talent remain ongoing challenges in Q1, and the situation remains dynamic for ATF and our customers. Through the dedicated focus and efforts of our teams and the deployment of our ABM, we are working to create further agility within our businesses to respond. To date, we've had a good level of success in mitigating some of the challenges. However, as I stated in Q4, we are not immune. That said, These challenges are also impacting customers and generally play to our favor as higher costs could be the tipping point, making the ROI more attractive for automation, assuming end market demands remain. 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. In Ukraine, We're supporting our team there, and some of our employees have returned to work on a semi-regular basis, with their safety being of utmost importance to us. The war in Ukraine also continues to create global, geopolitical and economic ramifications. In addition to the situation in Ukraine, other macro concerns create ongoing challenges for us to tackle throughout the remainder of the year. Moving to ADM highlights for the quarter. We remain focused on expanding our approach across all parts of the business. Our ABM playbook is part of our competitive advantage that's helped us stay ahead of the quickly evolving and challenging economic environment and creates a common language for all of our teams to use. Our biggest focus in Q1 continued to be on improving supply chain issues, cost effectiveness, and reduction of lead times. During the quarter, Our divisions ran many successful Kaizen and problem-solving events, while participation in our ABM boot camps was strong. In addition, we held our ATS Leadership Conference in person for the first time since 2019, as leaders from across the business gathered together. The ABM was one of the central themes for the event. I was encouraged to hear from a variety of leaders across the organization. as they showcase best practices and share their experience on the continuous improvement journey. We are proud of the ongoing commitment to the ABM and its strength as our playbook is more evident than ever during these challenging times. On M&A, our integration of previous acquisitions across the business are progressing to plan. We are actively cultivating our funnel. Overall, our funnel remains robust moving into Q2. On integration activities, I'd like to offer a few ongoing examples of the collaboration we're seeing with our teams. Comasur, along with one of our SP teams in Spain, have been working together on integrating Comasur isolators with SP throwing machines and have won their first project, which was kicked off in T1. We've also leveraged SP's channels to win a second booking through IWK with a carting solution. Building up a success of one of our Q4 President's Kaizen events, our life sciences synergy funnel has continued to grow. And as we noted previously, our services team is working closely with acquired businesses to share strategy, tools, and technology. We are encouraged by our team's focus and efforts on integration activities. On sustainability, we look forward to sharing our third annual sustainability report later this year. ATS has adopted various initiatives and policies addressing ESG factors relevant to the company, its employees, its suppliers, its customers, and the community as a whole. As an example, sustainability in packaging is increasing in importance with our customers, and oftentimes providing an innovative packaging solution along with automation capabilities increases our likelihood of winning business with some of our customers. we're developing an initial Packaging Competence Center at IWK, which is expected to be completed in the fall. On innovation, our teams consistently impress with their dedication to developing new applications in our key markets. A few highlights from Q1, our innovation team in Cambridge, along with Illuminate, launched new machine learning insights to the base Illuminate product. We've demonstrated symphony and launched collaborative functionality for SuperTrak Gen 3 at the Automatica show in Germany. This functionality enables an employee on the production line to work hand-in-hand with a machine in a safe environment. Our ChromaServe team showcased a new solid target processing system at a nuclear medicine industry event in June. And as an update to a topic I spoke about briefly in Q4, Biodot completed commissioning of an integrated demo unit that combines an SP-LYO and that BIO.LYO bead dispensing unit. In summary, we are pleased with our record order bookings and backlog and are encouraged by our Q1 performance, while at the same time remain focused on countermeasures to mitigate risks with special ongoing attention to supply chain. Our results demonstrate the strength and growth of our portfolio and offerings and the dedication of our global teams. As we execute on our strong backlog, we will continue to move forward with our strategy and build flexibility into our business. This will be assisted by our ABM as we deliver results for our customers and shareholders every day. Now I will turn the call over to Ryan. Ryan, over to you.