ATS Corporation Common Shares

Welcome to the ATS Corporation second quarter conference call and webcast. This call is being recorded on November 6, 2024 at 8.30 a.m. Eastern Time. Following the presentation, we will conduct a question and answer session. I'll now turn the call over to David Gallison, 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. 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 three 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 second quarter results for fiscal 25, which, as expected, were challenged due to lower revenues in transportation, where we realigned our cost structure to protect margins and drive performance improvements. We are pleased with execution across the rest of the business, notably in life sciences, where we drove our highest-ever quarterly bookings, both organically and through our recent acquisitions. During the quarter, we successfully completed the acquisitions of both Paxium and Hydoth. Both of these companies provide differentiated solutions across a range of industries that we expect will be a strong complement to our existing portfolios in food and beverage and life sciences. Today, I will update you on our business and markets, and Ryan will provide his financial report. In addition, as we disclose today, we have been and continue to be engaged in ongoing discussions with one of our EV customers who respect outstanding payments owed on large EV projects. Ryan will provide additional information in his remarks, starting with our financial value drivers. Order bookings for the quarter were $742 million. Flat year-over-year has strong growth in life sciences, offset lower EV bookings as expected. As we had previously noted, we expect transportation to be a smaller portion of our overall business going forward. Q2 revenues were $613 million, down 17% from Q2 last year, mainly due to expected lower EV revenues. Recent large program wins in life sciences will ramp up revenues in future periods. Adjusted earnings from operations in Q2 were $57 million. Moving to Outlook, order backlog ended the quarter at just over $1.8 billion. with trailing 12-month book-to-bill ratios, once again, at or above one in all market verticals, except transportation. By market, life sciences backlog was a record 1.1 billion, an increase of 32% compared to Q2 last year, with continued booking strength in our key submarkets, including radio pharma, GLP-1 auto injectors, wearable devices, and contact lenses. Our life sciences opportunity funnel is strong. We continue to identify opportunities which leverage the full breadth of our capabilities to deliver integrated solutions to our customers. A recent highlight is a collaboration between our life sciences systems and Comichair businesses to support a key customer on a dual-chambered syringe assembly system for cancer treatments. Building our life sciences integrated solutions funnel continues to be a focal point. and we have identified a number of opportunities for collaboration between Coma Chair, Paxium, SP, BioDot, and IWK. In food and beverage, ending backlog for the second quarter was $210 million, an increase of 30% compared to prior year. Our funnel remains strong and now includes Paxium opportunities, which have grown incrementally since acquisition. With Paxium as part of ATS, We look forward to leveraging customer synergies in food and beverage, but also in life sciences and consumer. In energy, our funnel is strong, with refurbishment of existing nuclear reactors remaining a key driver. We also have opportunities to serve customers in the SMR market, where we are supporting ongoing concept development work, positioning ourselves for opportunities as the demand for this technology increases over the long term. Recent investments by technology companies in nuclear energy support our strategy in the SMR market and reinforces the viability of nuclear energy as a reliable green energy source. In consumer products, our funnel remains stable with niche opportunities in areas such as warehouse automation and consumer packaging. In transportation, we made meaningful progress on realigning the cost structure. This has included reallocating workforce and capacity to other parts of the business, mainly life sciences. In addition, as I noted earlier, Ryan will provide further commentary on the recent commercial discussions with one of our EV customers. On after-sales services, our strategic focus is progressively expanding our core service capabilities from technical support and asset monitoring to complete production monitoring with deep customer knowledge and technical expertise. With our connected care hub in Cambridge, we've onboarded initial customers, and we are working to bring connected 24-7 support to additional key accounts, further deepening our relationships and creating opportunities for growth. On our digital offerings, demand is positive for solutions which improve productivity, energy management and process automation applications, and enterprise-level insights. We continue to advance our offerings in this space, including our internal capabilities to create more opportunities for customer interaction, data analytics, and access to service offerings. We also bolstered our digital capabilities by acquiring the assets of Vue Reality, a small software development business in Germany that specializes in augmented reality and virtual reality experiences. Our ATS business model continues to bring our people together to solve problems and drive continuous improvement across the organization. And ABM adoption in acquired companies is progressing well. I've recently spent time at Avidity, Paxium, and Hideoff locations with early ABM adoption clearly evident, and the teams are excited to use the tools and embrace continuous improvement. Across ATS, we continue to see increased participation in our ABM boot camps as employees demonstrate their commitment to building skills and driving impact. On M&A, our integration work is ongoing with our recent acquisitions, which support expansion of our products and reoccurring revenue portfolio. In the short term, we are focused on bringing leverage to targeted levels while continuing to cultivate the right opportunities that will strengthen our business and create value over the long term. Cultivation takes time. A great example is HIDOFF, which we have been monitoring for over three years before we had the right opportunity to execute on the deal in a quick and effective manner. Our M&A funnel remains active, and our portfolio is diversified across a range of target sizes and markets. We maintain our disciplined approach as we assess targets. while engaging in cultivating opportunities that align with our strategic initiatives. On innovation, we prioritize strategic capital investments into solutions that drive returns. A few highlights from the quarter. In food and beverage, we launched Digital Tomato, which uses our PAFax technology and allows customers to monitor and proactively optimize tomato production during the harvest season to prevent downtime and regulate energy usage. In life sciences, our co-mature team developed a new solution called MODIS, a modular system that can prepare up to four different radiopharmaceuticals sequentially without the need for time-consuming cleaning and decontamination between batches. Also in life sciences, our ATS Innovation Center completed significant under-the-hood improvements to SuperTrac, that will be on display next week at the SPS Expo in Germany. The new SuperTrac Horizon 3 will give our teams access to new markets and provide improved performance to meet demands of cutting-edge assembly equipment, including our own Symphony system. ATS has been a pioneer and innovation leader in linear motion conveyors for over 25 years, and SuperTrac Horizon 3 conveyance platform continues this tradition. In summary, Performance was mixed in the quarter, given challenges in transportation. We continue to work through commercial discussions with one of our EV customers. In the rest of our business, we are pleased with our second quarter bookings and performance. Our backlog, which is anchored in regulated markets, provides us with good revenue visibility as we move ahead. As we transition into the second half of fiscal 25 and next year, our focus remains on driving profitable growth both organically and by acquisition. I'm also pleased to announce that ATS was recently ranked in a list of Canada's most responsible companies for 2025 by Newsweek, highlighting the strength of our dedicated teams as they demonstrate exceptional commitment to innovation and maintaining our clear customer-centric approach to drive long-term value creation. Now, I will turn the call over to Ryan. Ryan, over to you.