ATS Corporation Common Shares

This call is being recorded on May 16th, 2024 at 8.30 a.m. Eastern Time. Following the presentation, we will conduct a question and answer session. I'd now like to turn the call over to David Gelson, Head of Investor Relations at ATS. You may now go ahead.

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 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 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, everyone, and thank you for joining us. Today, ATS reported our fourth quarter and annual results. For the fiscal year as a whole, ATS drove profitable growth supported by the highest revenues and earnings in company history. In the fourth quarter, we delivered one of our strongest bookings quarters on record, along with record revenues. Adjusted earnings were in line with our expectations. Our value creation strategy is being advanced as we completed four acquisitions during fiscal 24 and continued to invest in innovation, increasing our patent portfolio by almost 10% over last year. In addition, we have been active with our share buyback program since late March, having deployed $45 million to repurchase just over 1 million shares. The results reported today reflect the importance of deploying our strategy in our chosen markets, along with our team's commitment to the ABM as we drive continuous improvement throughout our global operations. This morning, I will update you on the business and our markets, and then Ryan will provide his financial report. Starting with our financial value drivers. Order bookings for the quarter were $791 million. supported by organic growth in life sciences, food and beverage, and energy. The underlying trends driving demand for ATS solutions remain favorable. For the full year, bookings were $2.9 billion. Q4 revenues were $792 million, up 8% from Q4 last year, including organic growth of 4%, along with our first full quarter of avidity results. For the full year, revenues increased by 18%. Adjusted earnings from operations in Q4 were $96 million. Full year adjusted earnings were $398 million, up 16% compared to fiscal 23. Moving to our outlook, our backlog remained strong at $1.8 billion. By market, life sciences backlog was $871 million. 14% higher than Q4 last year, supported by wins across all of our major life sciences businesses, including wins in auto-injector assembly, automated pharmacy, radiopharma, and pharma. Our life sciences opportunity funnel is strong, supported by market growth in key areas, including increased demand for GLP-1 drugs, wearable devices, automated pharmacies, and contact lenses. Our teams continue to offer and deliver integrated solutions to our customers from across the breadth of our life sciences operations. To give context on the GLP-1 opportunity for ATS, revenues from auto injector orders represented a low single digit percentage of fiscal 24 revenues. However, with the auto injector orders currently in our backlog and additional customer orders, We expect this to move towards a high single-digit percentage of total revenues over the next several years as demand grows for GLP-1 drugs and associated drug delivery solutions. Additional growth drivers include potential approvals for new applications such as cardiovascular disease combined with improved consumer access for GLP-1 drugs. In transportation, backlog was 425 million. reflecting our ongoing execution of large programs won in the prior fiscal year, combined with expected variability of program awards. We expect to see year-over-year pressure on EV revenues as we continue to execute on our backlog. Our sales funnel and transportation reflects short-term market uncertainty, as we have seen some opportunities move further out into the future. Our near-term funnel contains smaller opportunities relative to the size of the order bookings we've seen over the past 24 months. Longer term, the fundamentals remain intact, and we are well positioned to compete as the market continues to evolve. In food and beverage, Q4 bookings were strong, and our ending backlog was 230 million. We typically experience seasonal variations in bookings and revenue in this vertical related to primary processing as customers place orders ahead of the harvest season. However, the team continues to drive diversification into secondary processing and packaging, digitally enabled applications, as well as its customer base to offset some of this variability. To complement ATS's food and beverage offerings in packaging and end-of-line solutions, Yesterday afternoon, we announced an agreement to acquire Paxium, a global provider of primary, secondary, and end-of-line packaging machines in food and other industries, headquartered in Montreal. In energy, our funnel is strong, with a focus on refurbishment of existing nuclear reactors where new projects in Canada and around the world are being approved and moving towards implementation. We also have opportunities to serve customers as they build new reactors, including SMRs, over the long run. With our experience, specialized skills, and proven track record in these markets, ATS is well positioned to support customers in our area of expertise. In consumer products, our funnel remains stable, with niche opportunities in areas such as warehouse automation and consumer packaging. On after-sales services, The value of our offerings to customers is clear. Customer proximity and speed of response are critical. Our service teams are focused on delivering complete lifecycle solutions, including spare parts and digitally enabled services to help our customers improve their overall equipment effectiveness. In addition, as we build momentum on higher value offerings, we drove some early performance as a service solution wins. On our digital offerings, our funnel is strong. We are focused on developing capabilities for our customers to utilize an integrated architecture and analyze data in an efficient manner to drive performance and value across all markets that we serve. During the quarter, a global consumer products customer awarded ATS with a contract to build and service a global IoT platform. On ABM, We hosted our annual President Kaizen events. This year's events focused on a variety of improvement areas, from new product launches to how we respond to customer inquiries for after-sales services, as well as automating several manual processes to create efficiencies in how we process transactions. The President's Kaizen Week is a great demonstration of our team's collective drive for breakthrough change. The level of work we completed in a single week is a testament to the evolution of our ABM culture over time. ABM activity shows strong engagement, and we measure and monitor our success to identify areas for ongoing improvement and deployment of our tools across the organization. I'm particularly encouraged by the ongoing rollout and ABM adoption by the team at Avidity as part of our integration activities. On M&A, our funnel is active. healthy, and diversified across a range of target sizes. We continue to be actively engaged in cultivating opportunities of various sizes that fit with our strategy. The acquisition of Paxium, which we announced last night, is expected to close in the coming weeks, subject to customer closing conditions. We are disciplined in our approach and assessment of each target, and we continue to drive integration activities at our more recently acquired businesses, Integrations are progressing in line with our expectations. On innovation, we are committed to investing capital strategically to create solutions that drive returns. A few highlights from the quarter. In life sciences, our teams developed a new solution called Modulus to be used for miniaturized diagnostic devices. Modulus uses Biodot dispensing stations integrated with ATS SuperTrac conveyance platform and our Cortex vision system. Also in life sciences, our ComaChair team has developed new innovations to address GMP NX1 requirements related to the manufacture of sterile medicinal products. Finally, we are pleased to report that our PAFax platform is the basis for a newly launched customer portal in IWK, as well as for Marco Insights, a digital dashboard and machine benchmarking platform. PAFAX, which is our cloud-based IoT platform, also houses an energy management solution and several other increasingly scalable IoT offerings to support our customers across multiple industries. In summary, Q4 and full-year performance illustrates our continued progress as we execute on our strategy. Along with our financial results, our teams are focused on driving improvements across all of our value drivers. In fiscal 24, we saw continued strength in on-time delivery and quality, increased our internal fill rate, and reduced our voluntary turnover. We continue to be recognized as an employer of choice. We were recently included on the list of Southwestern Ontario's top employers for 2024. As we drive forward in fiscal 25, our opportunity funnel is well diversified. and we look forward to welcoming Paxium to the ATS portfolio. We are confident in our ability to drive our ABM culture as we continue to focus on creating shareholder value. Now I will turn the call over to Ryan. Ryan, over to you. Thank you, Andrew, and good morning, everyone.