TSX:ATS - Post Discussion
Post by
retiredcf on Nov 04, 2022 10:01am
More RBC
November 4, 2022
ATS Automation Tooling Systems
Announces C$192MM (US$140MM) of EV orders
TSX: ATA | CAD 44.60 | Outperform | Price Target CAD 55.00
Note: Priced as of market close on October 28, 2022.
Sentiment: Positive
What happened: ATS announced its Industrial Automation business has received Bookings for the continued capacity expansion of automated battery module and pack assembly systems in North America from an existing global automotive customer, valued at ~C$192 million (US$140 million). These Bookings 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 third announcement from the previously disclosed multi-phase enterprise program. The first announcement under this program was for C$90 million, announced on June 17, and the second announcement was for C$231 million, announced on October 3. The market reaction to the most recent (second) order was quite positive (stock was up ~10% on the day), and we expect a positive reaction to today's announcement as well given its size. In our view, this EV order (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, driven by its defensive/less cyclical end-market exposure and evolving (higher-margin) business mix. This announcement also highlights ATS' strong positioning in the EV space, which we expect will be a growth market over the coming years.
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