ATS Corp T.ATS

Alternate Symbol(s): ATS

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ATS Corporation is an automation solutions provider. It uses its knowledge base and global capabilities in custom automation, repeat automation, automation products and value-added solutions, including pre-automation and after-sales services, to address the sophisticated manufacturing automation systems and service needs of multinational customers in markets, such as life sciences, transportation, food and beverage, consumer products, and energy. It engages with customers on both greenfield programs, such as equipping new factories, and brownfield programs, including capacity expansions, production relocations, equipment upgrades, software upgrades, efficiency improvements and factory optimizations. It offers post-automation services. It offers artificial intelligence and machine-learning-based tools for industrial production. It designs and manufactures automated water purification solutions. It also manufactures lab equipment for the life sciences and pharmaceutical industries.

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Post by retiredcfon Jan 31, 2023 9:10am

172 Views

Post# 35256271

RBC

Fully expect them to raise their current target. GLTA

January 30, 2023

ATS Corporation
Announces EV order valued at ~C$163MM as part of multi-phase program

TSX: ATS | CAD 54.00 | Outperform | Price Target CAD 55.00

Sentiment: Positive

What happened: Today ATS announced that its Industrial Automation business has received bookings for automated battery assembly systems as part of an existing global automotive customer's ongoing capacity expansion in North America. Valued at ~C $163 million (~US$120 million), these bookings (to be recorded in ATS' FQ4) include the design, build, and installation of turnkey battery assembly systems, and are part of a previously disclosed multi-phase enterprise program (expected to be executed over the next 18-24 months).

Our view: This is the fifth announcement from a previously disclosed multi-phase enterprise program, which brings the total orders to-date to C$787 million. We note that ATS only announces orders (or groupings of orders) that are +$100 million. The first announcement under this program was for C$90 million (announced on June 17, 2022), the second announcement was for C$231 million (announced on October 3, 2022), the third announcement was for C$192 million (announced on November 4, 2022), and the fourth announcement was for C$111 million (announced on January 4, 2023). These large EV orders are characterized by longer durations (18-24 months) relative to a typical ATS project (9-10 months), and we believe the revenue contribution cadence from the larger projects will be akin to a "bell curve" (i.e., with most revenue recognized through the “middle portion” of project's life). This will likely result in a lower backlog conversion for the company in the near-term before normalizing over the medium-term. In our view, the continuation of EV orders under this multi-phase enterprise program (particularly at this point in the economic cycle) supports our thesis that ATS is well positioned to deliver strong top-line growth and margin improvement, and these larger orders provide good revenue visibility. This announcement also highlights ATS' strong positioning in the EV space, which we expect will be a growth market over the coming years. For more information on ATS and our positive thesis, please see our recent initiation here.