ATS(ATS) - 2024 Q4 - Annual Report

Fiscal 2025 Fourth Quarter and Full Year Financial Results Financial Highlights 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] - 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][6] Consolidated Financial Performance 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 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] 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 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 $0.49 per share, in Q4 FY2024[11] Q4 Profitability Metrics (YoY) | Metric | Q4 2025 | Q4 2024 | | :--- | :--- | :--- | | Adjusted EBITDA ($ million) | $97.1 | $115.8 | | Adjusted EBITDA Margin (%) | 13.5% | 14.6% | | Adjusted Basic EPS ($) | $0.41 | $0.65 | Business Operations and Orders 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 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] - 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] - The trailing twelve-month book-to-bill ratio was 1.23:1 as of March 31, 2025, indicating that new orders outpaced revenues[17] Recent Acquisitions 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] - Acquired Heidolph, a manufacturer of premium lab equipment for life sciences and pharmaceutical industries, for $45.1 million on August 30, 2024[8] Market Outlook and Forward-Looking Guidance 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] - The sales funnel remains strong in life sciences (pharmaceuticals, medical devices), food & beverage, and energy (nuclear, grid battery storage)[18] - The transportation funnel consists of smaller opportunities as North American customers moderate investment in new EV capacity[18] - 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] Key Corporate Developments 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 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] - The settlement resulted in a reduction to net income of $129 million ($171 million before taxes) for the year ended March 31, 2025[27] Other Corporate Matters 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] - 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] Detailed Financial Statements and Reconciliations Consolidated Financial Statements 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] Reconciliation of Non-IFRS to IFRS Measures 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] - 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][40] - 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] Investments, Liquidity, and Cash Flow 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 Non-IFRS and Other Financial Measures 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] - 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] - Supplementary measures like Order Bookings and Order Backlog are used as indicators of future revenues[55] Forward-Looking Statements 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][58] - Key risks identified include general market performance, international trade disputes, supply chain challenges, inflation, interest rate changes, and customer concentration[59] - 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][63]