Q4/F23 bookings of $737MM (+15.5% YoY); backlog stands at $2,153MM (+49.7% YoY; up slightly QoQ as well) – Bookings in the quarter totalled $737MM (+15.5% YoY including +11.1% organic growth; -24.7% QoQ), well ahead of RBC forecast of $567MM and implying a quarterly book-to-bill ratio of ~1.0x. Bookings in the quarter were driven by order growth in Transportation (primarily due to a previously-announced US$119.9MM booking from an existing EV customer), Food & Beverage, and Energy, partially offset by lower YoY bookings in Life Sciences (due to project timing) and Consumer Products (due to a large project award that occurred in Q4/F22). Backlog exiting Q4 stood at $2,153MM (+49.7% YoY, +0.47% QoQ). As a result of extended project conversion periods due to several large enterprise programs in the Backlog, ATS expects Backlog conversion of 32%-35% in FQ1. This implies FQ1 revenue of ~$689MM-$754MM (well ahead of current consensus of $661.0MM coming into FQ4).
Outlook commentary: Funnel activity remains strong across Life Sciences, Food & Beverage and Transportation, while the outlook for Consumer Products and Energy is "stable". Although some customers are exercising "normal" caution in their approach to investment and spending, management has noted funnel growth in markets where ESG requirements are increasingly in focus (e.g., battery storage, EVs, nuclear, etc.). Interestingly, the release notes ATS is focused on clean energy applications such as "refurbishment of nuclear power plants, early participation in the small modular reactor market, and grid battery storage". This is likely a reference to recent Nuclear refurbishment work in Ontario (see our note here following the recently-announced refurbishment contract award at Bruce Power) and the planned SMR build announced in January (see our note here following this announcement). We expect this to be a topic of focus on the 8:30AM call this morning. Additionally, the underlying trends driving growth in ATS's business (e.g., rising labor costs, labor shortages, production onshoring/reshoring, etc.) remain favorable. From a macro perspective, the company continues to address supply chain disruptions and cost pressures due to inflation. Despite these pressures, ATS continues to execute well in our view, as highlighted by the company's strong results to date.