ATS Corp T.ATS

TD

[retiredcf]

ATS Automation Tooling Systems Inc.

(ATA-T) C$43.04

Read-Throughs from ROK Earnings Beat and F2022 Guidance

Event

Rockwell Automation reported Q4/F21 and provided F2022 guidance.

Impact: POSITIVE read-throughs for ATS

• Rockwell and ATS have different business models and different end-market exposures, and therefore, we always find it somewhat difficult to extrapolate from Rockwell's results to those of ATS. That said, we believe that Rockwell's record quarterly orders and outlook for strong double-digit organic growth in F2022 have POSITIVE read-throughs for ATS.

• Q4/F21 Results: Rockwell reported Q4/F21 adjusted EPS of US$2.33, a 7% beat vs. the consensus estimate of US$2.18. Total sales of US$1,808mm were up 15% y/y, but came in 5% below the consensus estimate of US$1,900mm. Adjusted EPS was up 21% y/y, which Rockwell attributed primarily to higher sales and one- time favourable tax items. Quarterly orders were a record US$2.2bln, up 40% y/y, and the company indicated that orders were broadly-based across all industries and businesses.

• F2022 Guidance: Rockwell introduced its F2022 guidance, which calls for total sales growth of 16%-19%, including organic sales growth of 14%-17%, and adjusted EPS of US$10.50-US$11.10, which is 6% above the consensus estimate of US$10.23 at the midpoint (US$10.80). Rockwell attributed its guidance to strong demand and a record backlog entering F2022, with some sales shifting into F2022 due to supply-chain headwinds. The company indicated that supply chain challenges remain dynamic, with gradual improvement assumed over the course of the year.

• Organic Growth Outlook by Market: Rockwell expects mid-teens organic growth in F2022 in life sciences, food and beverage, and automotive. In Q1/F22, life sciences, food and beverage, and automotive comprised 59%, 11%, and 15% of ATS' backlog, respectively.