ATS Corporation Common Shares

Good morning, ladies and gentlemen. Welcome to the ATS Corporation third quarter conference call and webcast. This call is being recorded on February 9th, 2023 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 any difficulties hearing the conference, please press star followed by 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 atsautomation.com. Be cautioned 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 material factors or assumptions applied in making the statements are detailed on 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. ATS is proud to report another quarter of record bookings, backlog, and revenues. Adjusted earnings were in line with our expectation, and as anticipated, cash generation was strong as EV programs progressed. Despite continued economic volatility, our performance in this environment demonstrates the strength of our strategy and market focus and an unwavering commitment to the ATS business model, which is at the core of everything we do. In the quarter, we announced two acquisitions, made further progress on current integrations, and published our sustainability report. We also completed a corporate name change and rebranded to reflect the evolution of ATS as a diversified, technologically advanced organization delivering solutions that positively impact lives around the world. Our new name, ATS Corporation, under the new trading symbol ATS, better reflects the company we are today and creates consistency in our brand presence. Today, I will update you on the business, and Ryan will provide his financial report. Starting with our financial value drivers, Q3 revenues were $647 million, up 18% from Q3 last year, driven by a combination of acquired businesses and continued strength across our core operations. Organic revenue growth was 10% year-over-year, reflecting good execution across our strategic markets. Order bookings for the quarter of $979 million were another record, up 46% year-over-year, including $355 million of life sciences bookings and $392 million from transportation. Our adjusted EBIT margin in Q3 was 12.5%. Moving to our outlook. We finished the quarter with a record backlog of over $2.1 billion. Our backlog once again provides us with a solid base to work from in key markets. Life Sciences' backlog was $739 million, and in the quarter, we drove strong organic bookings growth versus last year. Our funnel has progressively strengthened throughout the year. We're also building our integrated funnel across Life Sciences businesses and see momentum continuing to build with great examples of ongoing collaboration between SP, Comisair, Life Sciences Systems, and BioDoc. For example, this quarter, SP partnered with Comisair and booked an integrated solution that included a flexible filling line for vials, syringes, and cartridges with an isolator. Synergies like this support our direction and the value proposition of our integrated Life Sciences group. Transportation ending backlog was $887 million, up 350% year over year, driven by the shift to electrification of vehicles. Subsequent to the end of the quarter, we announced another 120 million US in follow-on work from EV. Our experience in this space, combined with market dynamics, creates further opportunity for us to support key customers and the challenges they're facing in transforming their production capacity. In food and beverage, we're seeing a strong funnel, particularly in the produce processing and keg filling spaces. Our backlog is now at its highest level since we entered this space. Our energy efficient solutions continue to be in demand in a higher energy cost environment, particularly in Europe. In energy, governments are moving to decarbonize and boost energy security. Our focus remains on supporting nuclear customers. as well as those working in such areas as grid battery storage. And Q3 received an order from a leading small modular reactor customer in the US, which sets us up for additional orders for their production plants. In consumer products, our backlog and funnel remain stable. However, inflationary pressures in this market can impact end consumer buying habits, which drives our customers' automation needs. On our digital journey, connectivity, visualization, and data analytics can improve production outcomes for our customers by capturing and leveraging data in new ways and converting it to meaningful actions. With our existing and expanding capabilities in PA, along with other ATS offerings such as Illuminate, we are providing new opportunities for our aftermarket service teams to deliver collaborative, value-added services. Aftermarket services remains an area of strategic focus across all parts of the business. Our funnel remains strong, and our regional networks are now supporting more of our acquired businesses, including CFT and SP, in addition to all their operations. On supply chain, we're still experiencing higher prices. Despite some improvement in lead times within the quarter, overall lead times remain extended. and the situation remains challenging. Some of our component suppliers are experiencing gradual improvement. That said, we expect continued pressure until they're able to work through their backlogs. We are prepared to operate with ongoing volatility in our supply chain, and our teams remain focused on minimizing disruption to schedules and budgets through ABM savings workshops and other events. Our ABM continues to drive the business forward. During the quarter, we completed 37 ABM events across all business segments and affecting all of our value drivers. Key events in Q3 targeted on-time delivery with a focus on process improvements and time savings, as well as margin expansion with a focus on material usage and cost savings. As you know, ABM events are directly aligned to enhance our eight value drivers. The ABM also creates a continuous improvement culture that underpins our focus on profitable growth. On M&A, integration of previous acquisitions across the business is progressing to plan and our funnel development remains active and healthy. During the quarter, our PA group announced and finalized the acquisition of Ipcos Group, based in Belgium, and agreed to acquire Ziargus, a well-established automation systems integrator in Southeast Asia and Australia. These acquisitions add to our advanced process optimization and digital solutions, and further strengthen our position in key regions and markets. On sustainability, the report that we released in Q3 highlighted our 2030 targets, including three new ESG goals, and strengthen our commitments to our employees, customers, and shareholders. I encourage you to review our report if you have not done so already. On innovation, we constantly work to strategically deploy capital and talent to create differentiated, enabling solutions and drive return. A few highlights, in energy, We're developing a manipulator system prototype for refueling small, modular nuclear reactors as part of the order I mentioned earlier. Within food and beverage, Raytech launched two new specialized machines to provide better imaging of produce. Lead generation for both is positive. Within commissaire, we're testing a new solution for faster decontamination of aseptic pharmaceutical isolators and hot cells. This will be additive. to our radiopharmaceutical product and technology portfolio. And finally, we held our fifth Global Innovate Day. The event featured over 100 people from four participating divisions, plus participation from a local college as part of our focus on community outreach. The winning idea is expected to allow us to add laser marking functionality to our high-speed symphony platform. All teams focused on ROI and quickly advancing concepts to refresh our innovation funnel in a single day. Innovate Day is a powerful way to bring our teams together to drive creative, fast-turn innovation. In summary, we are encouraged by Q3 performance, including our record bookings and revenue. Notably, our order backlog gives us an extended platform of work on hand that contains high-value, mission-critical work for customers. We are pleased to be recognized again as both a Best Employer in Canada by Forbes Magazine, as well as a Waterloo Region Top Employer. And in Chicago, HS was recognized as being one of the best and brightest companies to work for by the National Association for Business Resources. These are meaningful acknowledgements to help us retain and recruit top talent and drive further growth. We are excited to refine and improve the ABM as it truly drives a competitive advantage for us. Despite economic uncertainty, our performance is validating our strategy and we remain confident in our ability to generate profitable growth across the business. We look forward to continuing to deliver on our commitments to our customers and our shareholders. Now I will turn the call over to Ryan. Ryan, over to you.