ATS Corporation Common Shares

recorded on August 8, 2024, at 8.30 a.m. Eastern Time. Following the presentation, we will conduct a question-and-answer session. I will now turn the call over to David Gellison, Head of Investor Relations at ATS. Please 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 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 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 first quarter results for fiscal 25, including our second highest bookings quarter in company history, led by both organic and acquisition within life sciences. The quarter's results once again reflect the strength of our ABM and disciplined execution of our strategy for value creation. To further advance our capabilities, we welcomed Paxium to the ATS portfolio in July, creating further opportunities in multiple and market verticals. This morning, I will update you on our business and markets, and Ryan will provide his financial report. starting with our financial value drivers. Order bookings for the quarter were $817 million, up 18% year-over-year, supported by organic growth and life sciences, along with consumer products. Q1 revenues were $694 million, down 8% from Q1 last year, as transportation revenues were lower, as expected, while we were in the early phases of executing on recent program wins in life sciences. By revenue stream, we drove solid growth in year-over-year service and product sales. Adjusted earnings from operations in Q1 were $86 million. Moving to Outlook, our backlog ended at $1.9 billion, with trailing 12-month book-to-bill ratios at or above 1 in all market verticals for the third consecutive quarter, with the exception of transportation. By market, life sciences backlog of $990 million is the highest in ATS history, an increase of 26% compared to Q1 last year. This quarter included a number of large orders across our strategic submarkets, including wearable devices and GLP-1 auto injectors, along with orders for radioisophil production lines. Our life sciences opportunity funnel is strong in all key submarkets. and our integrated life sciences solutions are creating new opportunities for our teams to harness a comprehensive suite of capabilities across customer value chains. In food and beverage, ending backlog for the first quarter was $216 million, an increase of 15% compared to prior year, and our funnel remains strong. With the Paxium acquisition, we look forward to leveraging customer synergies to expand our market position and support diversification of our offerings and customer base. Paxium's differentiated solutions in filling, wrapping, sealing, labeling, and palletizing across a range of industries will be a strong complement to our existing ATS portfolio, allowing us to offer complete packaging and end-of-line solutions. In energy, our funnel is strong. with refurbishment of existing nuclear reactors remaining a key driver. Our expertise with CANDU reactors positions us well as projects worldwide progress towards execution. We have opportunities to serve customers in the SMR market, where we are supporting ongoing concept development work with the long-term goal of positioning ourselves for opportunities as the technology moves to construction phases. In both the SMR and large-scale new-build markets, demand is benefiting from the need to achieve emissions targets globally. In addition, automation of fuel fabrication to support longer-term growth in the market is an emerging area of focus for ATS's previous experience. We are focused on expanding our international customer base while supporting our long-standing customers. In addition, we also have specialized skills in energy storage. and continue to work with customers on select opportunities. In transportation, backlog was $417 million as we continued to progress on large programs won in fiscal 23. Our sales funnel in transportation consists of smaller opportunities relative to the size of the order bookings we've seen over the past 24 months as industry participants reduce investments to match end market demand and lower platform costs. As our existing EV projects have been moved towards completion and customers have adjusted their end market demand expectations, we have been redeploying resources internally. Given the current market conditions, today we announced plans to realign our EV businesses and adjust our cost structure to reflect our expectations for EV to be a smaller portion of our overall business going forward. Ryan will provide further information in his prepared remarks. In consumer products, our funnel remains stable, including ongoing opportunities in areas such as warehouse automation and consumer packaging. This continues to be a niche market that makes use of our specialized capabilities and complements revenue and our larger verticals. On after-sales services, our regional networks remain a key element of our approach to growth across all vertical markets and create the proximity and response times that our customers need. Our teams remain focused on expanding our capabilities to drive momentum on higher-value services, including digitally-enabled insights. During the quarter, we launched our Service Experience Center in Cambridge, which will enable real-time asset monitoring and support over any asset's full lifecycle. Our Illuminate platform continues to be an important part for our ability to provide automation equipment monitoring and insights both onsite and remotely. On our digital offerings, our funnel is strong. Demand is positive for solutions which improve productivity or energy management and process automation applications. Our proven track record is a competitive advantage for us. We continue to build our suite of offerings, including additional capabilities being layered onto our Pafax platform, which is our cloud-based IoT platform that houses scalable technology IoT offerings to support our customers' production control systems. As an example, during the quarter, we launched additions for AI-based heat exchanger and compressor monitoring systems to our Enomaly product. With this addition, we further expand Enomaly as a leading comprehensive software product for AI-based predictive maintenance. We remain focused on developing our capabilities to allow us to support customers in the collection and analysis of data to meaningfully drive performance. On the ATS business model, we hosted our annual ATS Leadership Conference, where ABM culture and success stories were on display. Several teams were honored with ABM awards for overall value driver performance, innovation, recurring revenue, health and safety, and employee engagement. Throughout the quarter, our global teams engaged in formal continuous improvement efforts, including problem-solving events, Kaizens, and workshops focused on all of our value drivers. Our ABM culture continues to advance with evolving tools to improve day-to-day activities in addition to enterprise-wide events and a strong focus on sustaining impact. The value that our ABM drives for our employees, customers, and shareholders remains clear. On M&A, our funnel is active. and our portfolio remains diversified across a range of target sizes and markets. We maintain our disciplined approach as we assess targets, while being actively engaged in cultivating opportunities that align with our strategic initiatives. Integration activities are now underway at Paxium, guided by our ABM playbook. Meanwhile, integration of previous acquisitions, including Avidity, are progressing well. Both Paxium and Avidity, along with other recent acquisitions, are important contributors to expanding our recurring revenues. We are pleased to announce yesterday that we've signed an agreement to acquire the majority of the assets of Hideoff Instruments, which is a leading manufacturer of lab equipment, subject to clearing a closing condition. On innovation, capital investment into solutions that drive returns remains a point of emphasis in our strategy. A few highlights from the quarter, our Symphony platform continues to be a differentiator for high-speed automation assembly. And during the quarter, we launched Symphony Cell Conductor, a software add-on that enables regulatory compliance for the life sciences market. Using our PA FACS platform and building on our previous launches of MyIWK and Marco Insights, we've also launched MyCFT. a customer portal for tomato processing applications within our food and beverage market. At AdWK, our teams developed and successfully launched Cabli Blue, a carton-to-carton blistering offering that allows customers to meet their sustainable packaging requirements. This offering was originally developed during a President's Kaizen. The team added direct voice of customer feedback and have had positive lead generation since launch. The successful market deployment of this product is a good example of our focus on customer sustainability requirements, which continue to evolve. In summary, our first quarter bookings were strong and our backlog provides good revenue visibility. With the actions we've announced today, we remain confident in our strategic direction and focus on regulated end markets. Our dedicated team is demonstrating exceptional commitment to innovation and customer satisfaction that is necessary for long-term value creation. As we progress through fiscal 2025, we will continue to focus on delivering on our shared purpose, creating solutions that positively impact lives around the world. Now, I will turn the call over to Ryan. Ryan, over to you. Thank you, Andrew, and good morning, everyone.