Financial Performance - Q1 2026 revenues increased by approximately 6% year-over-year to $736.7 million CAD[14] - Q1 2026 adjusted earnings from operations were $78.6 million CAD, representing a 10.7% adjusted earnings from operations margin[14] - Q1 2026 free cash flow was $139.5 million CAD, a significant increase compared to $(51.3) million CAD in Q1 2025[17] - Net income decreased by 31.2% from $35.3 million CAD to $24.3 million CAD[17] - Basic earnings per share decreased by 30.6% from $0.36 CAD to $0.25 CAD[17] Order Bookings and Backlog - Q1 2026 order bookings totaled $693 million CAD, demonstrating diversification across market verticals[14] - The trailing twelve-month book-to-bill ratio was 1.17[14] - Order backlog remains strong at $2,068 million CAD[14] Revenue Outlook - Q2 F2026 revenue is estimated to be between $700 million CAD and $740 million CAD[19] Market Segment Performance - Life Sciences order backlog is $1,160 million CAD, supported by proven capabilities in regulated markets[15] - Food and Beverage order backlog is $229 million CAD, with opportunities in primary and secondary processing and packaging[15] - Consumer Products order backlog is $262 million CAD, supported by capabilities in warehouse automation and packaging[15]

Company Overview - ATS is expected to report a year-over-year decline in earnings of 27%, with an estimated earnings per share (EPS) of $0.27 for the quarter ended June 2025 [3][12] - Revenue is projected to be $517.13 million, reflecting a slight increase of 1.9% compared to the same quarter last year [3] Earnings Expectations - The earnings report is anticipated to be released on August 7, and the stock may experience upward movement if actual results exceed expectations [2] - Conversely, if the results fall short, the stock may decline [2] Estimate Revisions - The consensus EPS estimate has been revised down by 0.67% over the last 30 days, indicating a bearish sentiment among analysts regarding ATS's earnings prospects [4][12] - The current Earnings ESP for ATS stands at -34.31%, suggesting a negative outlook compared to the consensus estimate [12] Historical Performance - In the last reported quarter, ATS had an EPS of $0.28, surpassing the expected $0.26, resulting in a surprise of +7.69% [13] - Over the past four quarters, ATS has only beaten consensus EPS estimates once [14] Industry Comparison - Another company in the same industry, Middleby (MIDD), is expected to report an EPS of $2.26 for the same quarter, indicating a year-over-year decline of 5.4% [18] - Middleby's revenue is projected to be $982.71 million, down 0.9% from the previous year [18] - Middleby has an Earnings ESP of -2.66% and a Zacks Rank of 3, making it similarly challenging to predict an earnings beat [19]

[Fiscal 2025 Fourth Quarter and Full Year Financial Results](index=1&type=section&id=Fiscal%202025%20Fourth%20Quarter%20and%20Full%20Year%20Financial%20Results) [Financial Highlights](index=1&type=section&id=Financial%20Highlights) ATS Corporation's fiscal 2025 was marked by strong Order Bookings and Backlog growth, but a significant net loss due to a one-time EV customer settlement Q4 Fiscal 2025 Key Metrics | Metric | Q4 2025 | Q4 2024 | Change | | :--- | :--- | :--- | :--- | | Revenues ($ million) | $574.2 | $791.5 | -27.5% | | Adjusted Revenues¹ ($ million) | $721.1 | $791.5 | -8.9% | | Net Income (Loss) ($ million) | $(68.9) | $48.5 | -242.1% | | Adjusted Basic EPS¹ ($) | $0.41 | $0.65 | -36.9% | | Order Bookings ($ million) | $863 | $791 | +9.1% | Full Year Fiscal 2025 Key Metrics | Metric | Fiscal 2025 | Fiscal 2024 | Change | | :--- | :--- | :--- | :--- | | Revenues ($ million) | $2,533.3 | $3,032.9 | -16.5% | | Adjusted Revenues¹ ($ million) | $2,680.2 | $3,032.9 | -11.6% | | Net Income (Loss) ($ million) | $(28.0) | $194.2 | -114.4% | | Adjusted Basic EPS¹ ($) | $1.47 | $2.61 | -43.7% | | Order Bookings ($ million) | $3,305 | $2,891 | +14.3% | - A one-time settlement with an EV customer significantly impacted results, accounted for as a **$146.9 million** decrease in revenue and a **$24.2 million** increase in SG&A for Q4[5](index=5&type=chunk) - Order Backlog grew **19.3%** year-over-year to **$2,139 million** as of March 31, 2025, enhancing revenue visibility for the upcoming fiscal year[5](index=5&type=chunk)[6](index=6&type=chunk) [Consolidated Financial Performance](index=3&type=section&id=Consolidated%20Financial%20Performance) Q4 FY2025 IFRS revenues declined significantly to **$574.2 million** due to an EV customer settlement, leading to a net loss of **$68.9 million** [Revenue Analysis](index=3&type=section&id=Revenue%20Analysis) Q4 adjusted revenues decreased **8.9%** to **$721.1 million**, driven by declines in construction and services, while transportation revenues plummeted **69.2%** - Q4 IFRS revenues were **$574.2 million**, down **27.5%** YoY. The decline was driven by a **$146.9 million** EV customer settlement, a **$120.2 million (15.2%)** decrease in organic revenue, partially offset by **$28.5 million** from acquisitions[9](index=9&type=chunk) Q4 Adjusted Revenue Growth by Market (YoY) | Market | Growth (%) | Key Drivers | | :--- | :--- | :--- | | Life Sciences | +11.1% | Acquisitions ($19.4 million), organic growth from higher backlog | | Food & Beverage | +13.2% | Acquisitions ($9.1 million), positive FX impact | | Consumer Products | +27.2% | Higher Order Backlog entering the quarter | | Transportation | -69.2% | Lower Order Backlog as prior year had large EV projects | | Energy | +38.7% | Higher Order Backlog entering the quarter | [Profitability Analysis](index=3&type=section&id=Profitability%20Analysis) The company reported a Q4 net loss of **$68.9 million**, with Adjusted EBITDA falling to **$97.1 million** and margin contracting to **13.5%** due to lower revenues - Q4 FY2025 net loss was **$68.9 million**, or **($0.70)** per share, a significant decrease from the **$48.5 million** net income, or **$0.49** per share, in Q4 FY2024[11](index=11&type=chunk) Q4 Profitability Metrics (YoY) | Metric | Q4 2025 | Q4 2024 | | :--- | :--- | :--- | | Adjusted EBITDA ($ million) | $97.1 | $115.8 | | Adjusted EBITDA Margin (%) | 13.5% | 14.6% | | Adjusted Basic EPS ($) | $0.41 | $0.65 | [Business Operations and Orders](index=2&type=section&id=Business%20Operations%20and%20Orders) ATS saw strong commercial momentum with Q4 Order Bookings up **9.1%** to **$863 million**, contributing to a **19.3%** rise in Order Backlog to **$2,139 million** [Order Bookings and Backlog](index=4&type=section&id=Order%20Bookings%20and%20Backlog) Q4 Order Bookings increased **9.1%** to **$863 million**, driven by organic growth and acquisitions, resulting in a **19.3%** rise in Order Backlog to **$2,139 million** - Q4 Order Bookings increased **9.1%** YoY to **$863 million**, reflecting organic growth (**2.6%**), contributions from acquisitions (**$31.5 million** or **4.0%**), and positive currency effects (**2.5%**)[16](index=16&type=chunk) - Order Backlog stood at **$2,139 million** at March 31, 2025, a **19.3%** increase from the previous year, driven by strength in life sciences, consumer products, food & beverage, and energy markets[17](index=17&type=chunk) - The trailing twelve-month book-to-bill ratio was **1.23:1** as of March 31, 2025, indicating that new orders outpaced revenues[17](index=17&type=chunk) [Recent Acquisitions](index=2&type=section&id=Recent%20Acquisitions) ATS expanded its portfolio by acquiring Paxiom Group for **$146.4 million** to enhance packaging capabilities and Heidolph for **$45.1 million** to strengthen its life sciences presence - Acquired Paxiom Group, a provider of packaging machines for food & beverage, cannabis, and pharmaceutical industries, for a total purchase price of **$146.4 million** on July 24, 2024[7](index=7&type=chunk) - Acquired Heidolph, a manufacturer of premium lab equipment for life sciences and pharmaceutical industries, for **$45.1 million** on August 30, 2024[8](index=8&type=chunk) [Market Outlook and Forward-Looking Guidance](index=5&type=section&id=Market%20Outlook%20and%20Forward-Looking%20Guidance) ATS maintains a positive outlook with a strong sales funnel in life sciences and energy, anticipating Q1 FY2026 revenues between **$680 million** and **$730 million** supported by a substantial Order Backlog - For the first quarter of fiscal 2026, the company expects to generate revenues in the range of **$680 million** to **$730 million**[20](index=20&type=chunk) - The sales funnel remains strong in life sciences (pharmaceuticals, medical devices), food & beverage, and energy (nuclear, grid battery storage)[18](index=18&type=chunk) - The transportation funnel consists of smaller opportunities as North American customers moderate investment in new EV capacity[18](index=18&type=chunk) - The company's long-term goal is to maintain its investment in non-cash working capital as a percentage of annualized revenues below **15%**[23](index=23&type=chunk) [Key Corporate Developments](index=6&type=section&id=Key%20Corporate%20Developments) ATS finalized a **$134.75 million** EV customer settlement, incurred **$24.0 million** in reorganization costs, and identified ineffective internal controls over financial reporting as of March 31, 2025 [EV Customer Settlement](index=6&type=section&id=EV%20Customer%20Settlement) ATS settled with an EV customer for a **U.S. $134.75 million** payment in Q1 FY2026, resulting in a **$171 million** pre-tax charge and a **$129 million** net income reduction in Q4 FY2025 - The company reached a settlement with an EV customer and expects to receive a payment of **U.S. $134.75 million** in Q1 fiscal 2026[25](index=25&type=chunk) - The settlement resulted in a reduction to net income of **$129 million** (**$171 million** before taxes) for the year ended March 31, 2025[27](index=27&type=chunk) [Other Corporate Matters](index=6&type=section&id=Other%20Corporate%20Matters) The company incurred **$24.0 million** in fiscal 2025 restructuring costs and identified ineffective internal controls over financial reporting as of March 31, 2025, without restating financials - In fiscal 2025, the company recorded total restructuring costs of **$24.0 million**[24](index=24&type=chunk) - Management concluded that internal controls over financial reporting were not effective as of March 31, 2025, but this did not result in any restatement of financial statements[29](index=29&type=chunk) [Detailed Financial Statements and Reconciliations](index=9&type=section&id=Detailed%20Financial%20Statements%20and%20Reconciliations) [Consolidated Financial Statements](index=17&type=section&id=Consolidated%20Financial%20Statements) The audited Consolidated Financial Statements show total assets of **$4.62 billion** and a net loss of **$28.0 million** on **$2.53 billion** revenues for fiscal 2025 Consolidated Statement of Financial Position (Year-End) | Metric | March 31, 2025 ($ million) | March 31, 2024 ($ million) | | :--- | :--- | :--- | | Total Assets | $4,621.9 | $4,088.8 | | Total Liabilities | $2,912.5 | $2,404.9 | | Total Equity | $1,709.4 | $1,683.9 | Consolidated Statement of Income (Full Year) | Metric | Fiscal 2025 ($ million) | Fiscal 2024 ($ million) | | :--- | :--- | :--- | | Revenues | $2,533.3 | $3,032.9 | | Earnings from Operations | $9.3 | $315.4 | | Net Income (Loss) | $(28.0) | $194.2 | | Basic EPS (Loss) ($) | $(0.29) | $1.98 | - Cash flows from operating activities for fiscal 2025 were **$25.8 million**, while cash used in investing activities was **$268.4 million**, and cash provided by financing activities was **$290.3 million**[49](index=49&type=chunk) [Reconciliation of Non-IFRS to IFRS Measures](index=11&type=section&id=Reconciliation%20of%20Non-IFRS%20to%20IFRS%20Measures) This section reconciles non-IFRS measures like Adjusted EBITDA, Adjusted Net Income, and Adjusted Revenues to IFRS, removing impacts from the EV settlement, acquisitions, and restructuring for clearer operational insights - Adjusted EBITDA is reconciled to Net Income by adding back net finance costs, taxes, depreciation & amortization, and removing items like restructuring charges and the EV customer settlement[38](index=38&type=chunk) - Adjusted Net Income and Adjusted Basic EPS are reconciled from IFRS figures by excluding items such as amortization of acquisition-related intangibles, restructuring charges, the EV customer settlement, and related tax effects[39](index=39&type=chunk)[40](index=40&type=chunk) - Free cash flow for fiscal 2025 was a negative **$52.3 million**, calculated from **$25.8 million** in cash from operations less **$78.1 million** in capital expenditures for property, plant, equipment, and intangible assets[41](index=41&type=chunk) [Investments, Liquidity, and Cash Flow](index=16&type=section&id=Investments%2C%20Liquidity%2C%20and%20Cash%20Flow) As of March 31, 2025, ATS held **$225.9 million** in cash, with its debt-to-equity ratio increasing to **1.10:1**, while operating activities provided **$25.8 million** in cash for the fiscal year Liquidity Position (Year-End) | Metric | March 31, 2025 ($ million) | March 31, 2024 ($ million) | | :--- | :--- | :--- | | Cash and cash equivalents | $225.9 | $170.2 | | Debt-to-equity ratio | 1.10:1 | 0.79:1 | Fiscal 2025 Cash Flow Summary | Activity | Cash Flow ($ million) | | :--- | :--- | | Operating activities | $25.8 | | Investing activities | $(268.5) | | Financing activities | $290.3 | [Disclosures](index=20&type=section&id=Disclosures) [Non-IFRS and Other Financial Measures](index=20&type=section&id=Non-IFRS%20and%20Other%20Financial%20Measures) This section defines non-IFRS and supplementary financial measures used to evaluate performance and liquidity, clarifying they are not standardized under IFRS and may not be comparable - The company uses non-IFRS measures like Adjusted EBITDA, adjusted earnings from operations, and adjusted basic EPS to evaluate performance[51](index=51&type=chunk) - Management believes these adjusted measures increase comparability between periods by removing items such as acquisition-related costs, restructuring charges, and the EV customer settlement[54](index=54&type=chunk) - Supplementary measures like Order Bookings and Order Backlog are used as indicators of future revenues[55](index=55&type=chunk) [Forward-Looking Statements](index=22&type=section&id=Forward-Looking%20Statements) This section contains forward-looking statements regarding future performance and strategy, cautioning readers about numerous risks and uncertainties that could cause actual results to differ materially - The document contains forward-looking statements concerning the company's strategy, market opportunities, Order Backlog conversion, and financial outlook (e.g., quarterly revenue guidance)[57](index=57&type=chunk)[58](index=58&type=chunk) - Key risks identified include general market performance, international trade disputes, supply chain challenges, inflation, interest rate changes, and customer concentration[59](index=59&type=chunk) - The statements are based on current estimates and assumptions, and the company undertakes no obligation to update them other than as required by law[61](index=61&type=chunk)[63](index=63&type=chunk)

Core Insights - Three stocks have been added to the Zacks Rank 5 (Strong Sell) List, indicating a negative outlook for these companies [1][2] Company Summaries - ATS Corporation (ATS) is a global provider of automation solutions, with a current year earnings estimate revised downward by 4.5% over the last 60 days [1] - CONMED Corporation (CNMD) is a medical technology company specializing in surgical devices, experiencing a 7.3% downward revision in its current year earnings estimate over the last 60 days [1] - CSX Corporation (CSX) operates in rail-based freight transportation services, with its current year earnings estimate revised downward by 9.9% over the last 60 days [2]

Financial Data and Key Metrics Changes - Order bookings for Q3 were $883 million, up 32% compared to Q3 last year, marking the second highest bookings quarter in company history [6][25] - Q3 revenues were $652 million, down 13% from Q3 last year, primarily due to lower EV revenues as expected [6][27] - Adjusted earnings from operations in Q3 were $66 million, reflecting a decrease of 35% from the prior year [28] - The order backlog at the end of the quarter was approximately $2.1 billion, with a trailing 12-month book-to-bill ratio of 1.18 to 1 [7][30] Business Line Data and Key Metrics Changes - In life sciences, order backlog reached a record $1.2 billion, an increase of 39% compared to Q3 last year [11] - The food and beverage segment ended the quarter with a record backlog of $252 million, an increase of 22% compared to last year [12] - The energy segment showed strong funnel growth, supported by refurbishment opportunities for nuclear power generation facilities [13] - Transportation business continued restructuring to align with lower market demand, particularly in EV [15] Market Data and Key Metrics Changes - The life sciences market saw strong bookings in key sub-markets such as radiopharma and medical devices [11] - The energy market is experiencing growth, particularly in nuclear refurbishment and new builds [13][49] - The consumer products market remains stable with niche opportunities in automated warehouse solutions [14] Company Strategy and Development Direction - The company is focused on expanding market reach through high-value applications and growing recurring revenues to offset variability in bookings [8] - Integration activities for recent acquisitions are underway, with a strong M&A funnel being cultivated [19][21] - The company is committed to innovation, particularly in AI-driven initiatives, to enhance capabilities and deliver long-term value [22] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in navigating potential tariff impacts and emphasized the strength of their teams and processes [9][33] - The company anticipates continued margin improvement, albeit modestly in Q4, as restructuring efforts take effect [45][46] - Management remains optimistic about the strong order backlog and diversified bookings across markets, providing good revenue visibility [38][39] Other Important Information - The company generated cash flows from operating activities of $66.7 million in Q3 [34] - The net debt to adjusted EBITDA ratio was 3.7 times, with a commitment to reduce leverage to a target range of two to three times [37][114] - The company released its fifth annual Sustainability Report, reaffirming commitments to sustainability goals [23] Q&A Session Summary Question: Will margin improvements impact overall operating margins for fiscal Q4? - Management expects continued margin improvement, but it will be modest due to the timing of new business ramp-up in transportation [44][46] Question: Can you provide context on the energy or nuclear segment's growth? - The segment saw strong bookings from multiple customers, with ongoing opportunities in refurbishment and new builds [49][53] Question: What is the status of the dispute with the large EV customer? - The equipment has been delivered and remains in production at the customer site, with no revenues related to the dispute in the quarter [56][142] Question: How is the company addressing potential tariff impacts? - Management is closely monitoring the situation and working with customers and suppliers to mitigate challenges [33][62] Question: What is the outlook for capital allocation and leverage reduction? - The priority is to reduce leverage to the target range of two to three times, with ongoing cultivation of M&A opportunities [114][116] Question: How does the company view the nuclear market's potential? - Management sees a strong niche position in nuclear and anticipates it will be a valuable part of the revenue mix moving forward [118][120]

Financial Performance - Q3 2025 revenues decreased by approximately 133% year-over-year to $652 million [10], compared to $752 million in Q3 2024 [12] - Adjusted earnings from operations for Q3 2025 were $657 million [10], a decrease of approximately 351% compared to $1012 million in Q3 2024 [12] - Net income for Q3 2025 was $65 million [12], a significant decrease of approximately 862% compared to $472 million in Q3 2024 [12] - Organic revenue decreased by approximately 202% for Q3 and 188% year-to-date [12] Order Bookings and Backlog - Q3 2025 order bookings increased by approximately 32% year-over-year to $883 million [10] - The company's order backlog stands at $2060 million [10], providing good revenue visibility [11] - The trailing twelve-month book-to-bill ratio is 118, or 124 excluding transportation [10] Outlook - The company estimates Q4 F25 revenue to be in the range of $650 million to $710 million [13, 15] - The company has a strong and diversified order backlog across various sectors, including Life Sciences ($1220 million), Food and Beverage ($252 million), Energy ($158 million), Consumer Products ($180 million), and Transportation ($250 million) [11]

Financial Performance - Total revenues for the three months ended December 29, 2024, were $651,993, a decrease of 13.3% compared to $752,052 for the same period in 2023[3] - Net income for the three months ended December 29, 2024, was $6,505, down 86.2% from $47,182 in the same period last year[3] - Earnings per share attributable to shareholders for the three months ended December 29, 2024, were $0.07, compared to $0.48 for the same period in 2023[3] - Comprehensive income for the three months ended December 29, 2024, was $65,008, compared to $45,049 for the same period in 2023, an increase of 44.4%[5] - The company reported an income before income taxes of $10,642 for the three months ended December 29, 2024, compared to $60,994 for the same period in 2023[70] Assets and Liabilities - Total assets increased to $4,666,313 as of December 29, 2024, up from $4,088,799 as of March 31, 2024, representing a growth of 14.1%[2] - Total liabilities increased to $2,910,273 as of December 29, 2024, from $2,404,852 as of March 31, 2024, reflecting a rise of 21%[2] - Cash and cash equivalents rose to $263,152 as of December 29, 2024, compared to $170,177 as of March 31, 2024, an increase of 54.6%[2] - Trade receivables as of December 29, 2024, were $663,146,000, an increase of 51.7% from $437,329,000 as of March 31, 2024[91] - Contract assets decreased to $619,510,000 as of December 29, 2024, from $704,703,000 as of March 31, 2024[91] - Net contract balances increased to $853,614,000 as of December 29, 2024, compared to $778,772,000 as of March 31, 2024[91] Operating Costs and Expenses - The company reported operating costs of $454,061 for the three months ended December 29, 2024, down 15.7% from $538,435 in the same period last year[3] - The company incurred restructuring costs of $3,360 for the three months ended December 29, 2024, compared to $16,228 in the same period last year[3] - Interest expense for the three months ended December 29, 2024, was $25,255,000, an increase of 49.5% from $16,898,000 in 2023[94] - The company recorded risk management losses of $13,310 for the three months ended December 29, 2024, compared to gains of $1,487 in the same period of the previous year[49] Equity and Shareholder Information - Total equity as of December 31, 2023, reached CAD 1,618,266 thousand, up from CAD 1,130,583 thousand as of March 31, 2023, indicating a growth of approximately 43%[7] - The Company has a normal course issuer bid allowing for the repurchase of up to 8,259,180 common shares until December 15, 2025[65] - As of December 29, 2024, the Company has repurchased 1,020,887 common shares for $44,983 under the previous NCIB program[66] - The weighted average number of common shares outstanding for the three months ended December 29, 2024, was 97,926,990, a decrease from 98,906,456 in 2023[97] Acquisitions - The acquisition of Paxiom Group was completed for a total purchase price of CAD 146,438 thousand, enhancing the company's capabilities in packaging solutions[22] - The total purchase price for the acquisition of Paxiom was $146,438, with a net identifiable asset value of $66,901 and residual goodwill of $79,537[24] - Paxiom contributed approximately $22,323 in revenue and incurred a net loss of $1,235 from the acquisition date to December 29, 2024[26][27] - The total purchase price for the acquisition of Heidolph was $45,064, with net identifiable assets valued at $42,722 and residual goodwill of $2,342[28][29] - Heidolph contributed approximately $23,335 in revenue and incurred a net loss of $1,066 from the acquisition date to December 29, 2024[31] Cash Flow and Financing - Cash flows provided by operating activities for the nine months ended December 31, 2023, were CAD 11,205 thousand, a significant decrease from CAD 110,508 thousand in the previous year[9] - The company recorded a significant cash outflow of CAD 269,274 thousand in investing activities for the nine months ended December 31, 2023, compared to CAD 315,454 thousand in the previous year[9] - The Company issued $600,000 in CAD Senior Notes at an interest rate of 6.50% per annum, with the latest issuance completed on December 19, 2024[61] - The Company has a total of $1,611,232 in long-term debt as of December 29, 2024, which includes $519,335 from the Credit Facility and $1,103,380 from Senior Notes[64] Taxation - The effective income tax rate increased to 29% for the nine months ended December 29, 2024, compared to 24% for the same period in 2023[70] - The company recognized income tax expense related to Pillar Two income taxes of CAD 1,579 for the nine months ended December 29, 2024, compared to CAD 0 in the same period of 2023[71] Stock Options and Compensation - The number of stock options outstanding increased to 1,035,380 with a weighted average exercise price of CAD 36.05 as of December 29, 2024, compared to 865,386 options at CAD 33.43 in the prior year[74] - The company granted 241,327 time-vesting stock options during the nine months ended December 29, 2024, compared to 176,112 in the same period of 2023[73] - The company incurred stock-based compensation expenses of CAD 9,907 thousand for the nine months ended December 31, 2023, compared to CAD 8,146 thousand in the previous year[9] Market Conditions and Risks - The company expects to continue monitoring the potential impact of tariffs on its financial condition and operations, which remains uncertain[21] - The company recorded unrealized losses of $5,016 on foreign currency risk management forward contracts during the three months ended December 29, 2024[49]

Q2 2025 Earnings Call November 6, 2024 8:30am ET Today's Hosts /ATS" Andrew Hider Ryan McLeod Chief Executive Officer Chief Financial Officer Forward Looking Statements Note to Reader: This presentation and the oral statements made during this call contain certain statements that may constitute forward-looking information and forward-looking statements within the meaning of applicable Canadian and United States securities laws ("forward-looking statements"). All such statements are made pursuant to the "saf ...

ATS Corporation. (NYSE:ATS) Q2 2025 Earnings Conference Call November 6, 2024 8:30 AM ET Company Participants David Galison - Head of Investor Relations Andrew Hider - Chief Executive Officer Ryan McLeod - Chief Financial Officer Conference Call Participants Sabahat Khan - RBC Justin Keywood - Stifel David Ocampo - Cormark Securities Patrick Sullivan - TD Cowen Maxim Sytchev - National Bank Financial Michael Glen - Raymond James Patrick Baumann - JPMorgan Operator Welcome to the ATS Corporation Second Quart ...

Financial Performance - For the six months ended September 29, 2024, the company reported an income (loss) before income taxes of $(1,366) thousand, compared to $67,561 thousand for the same period last year[93]. - For the six months ended September 29, 2024, total company revenue was CAD 1,307,051, a decrease from CAD 1,489,365 for the same period in 2023, representing a decline of approximately 12.2%[119]. - The total company revenue for the three months ended September 29, 2024, was CAD 612,781, down from CAD 735,716 for the same period in 2023, reflecting a decline of approximately 16.7%[119]. - Revenue from construction contracts for the three months ended September 29, 2024, was CAD 317,462, compared to CAD 479,755 for the same period in 2023, indicating a decrease of about 33.9%[119]. - The company reported total revenue from external customers in the United States for the six months ended September 29, 2024, at CAD 583,063, compared to CAD 723,755 for the same period in 2023, a decrease of approximately 19.4%[118]. Debt and Financing - As of September 29, 2024, the Company had utilized $732,532 under its Credit Facility, with $732,520 classified as long-term debt[73]. - The Company has additional credit facilities available totaling $110,935, with $19,497 outstanding as of September 29, 2024[78]. - The Company's U.S. $350,000 aggregate principal amount of senior notes bears interest at a rate of 4.125% per annum and matures on December 15, 2028[79]. - On August 21, 2024, the Company completed a private placement of $400,000 aggregate principal amount of senior unsecured notes, bearing interest at a rate of 6.50% per annum, maturing on August 21, 2032[82]. - The Company’s long-term debt as of September 29, 2024, is $1,594,002, up from $1,171,796 on March 31, 2024[85]. - The Company met all financial covenants under its Credit Facility as of September 29, 2024[77]. Restructuring and Cost Management - The North American Electric Vehicle market is experiencing a slowdown in sales growth, leading to reduced investment and program cancellations, prompting the Company to initiate cost structure reductions in its transportation-related businesses, with restructuring expenses of $17,075 recorded in Q2 fiscal 2025[71]. - The total estimated cost of restructuring activities is expected to be at the higher end of the previously disclosed range of $15,000 to $20,000[71]. Stock and Shareholder Activity - During the six months ended September 29, 2024, the Company repurchased 1,020,887 common shares under its normal course issuer bid for $44,983[89]. - The balance of common shares outstanding decreased from 98,219,496 on March 31, 2024, to 96,869,371 on September 29, 2024[90]. - The total number of stock options outstanding increased to 1,048,581 with a weighted average exercise price of $36.16 as of September 29, 2024, compared to 906,218 options at $32.83 as of October 1, 2023[98]. - The company granted 241,327 time-vesting stock options during the six months ended September 29, 2024, with a weighted average exercise price of $45.37[100]. - The stock-based compensation expense for the six months ended September 29, 2024, totaled $6,423 thousand, down from $13,445 thousand for the same period last year[108]. Tax and Deferred Tax - The company recognized an income tax expense related to Pillar Two income taxes of $538 thousand for the three months ended September 29, 2024, and $1,051 thousand for the six months ended September 29, 2024[93]. - The company recognized a deferred tax recovery of $(10,882) thousand for the three months ended September 29, 2024, compared to a deferred tax expense of $9,683 thousand for the same period last year[93]. Contract and Asset Management - Total net contract assets and liabilities as of September 29, 2024, were CAD 344,802, compared to CAD 392,499 as of March 31, 2024, showing a decrease of approximately 12.2%[124]. - Estimated earnings for contracts in progress as of September 29, 2024, were CAD 1,484,945, compared to CAD 1,354,259 as of March 31, 2024, indicating an increase of about 9.6%[124]. - The weighted average number of common shares outstanding for the three months ended September 29, 2024, was 97,926,369, down from 98,883,583 for the same period in 2023[130]. Working Capital and Liabilities - Total change in non-cash working capital decreased by $74,280 in the three months ended September 29, 2024, compared to a decrease of $87,212 in the same period last year[134]. - Contract assets increased to $136,775 in the three months ended September 29, 2024, from $15,768 in the previous year[134]. - Accounts payable and accrued liabilities decreased to $72,030 in the latest quarter, compared to $5,031 in the same period last year[134]. - Contract liabilities increased to $120,509 in the three months ended September 29, 2024, from $35,770 in the previous year[134]. - Provisions increased to $8,700 in the latest quarter, compared to a decrease of $1,784 in the same period last year[134]. - Inventories decreased to $8,377 in the three months ended September 29, 2024, from $10,473 in the previous year[134]. - Foreign exchange and other liabilities increased to $7,999 in the latest quarter, compared to $1,397 in the same period last year[134]. - Income tax receivable slightly increased to $2,343 in the latest quarter, compared to $2,219 in the previous year[134]. - Deposits, prepaids, and other assets increased to $9,596 in the three months ended September 29, 2024, from a decrease of $4,297 in the previous year[134]. - Total accounts receivable decreased to $(17,972) in the latest quarter, compared to $(107,220) in the same period last year[134].