Bullboard - Stock Discussion Forum 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... see more

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TSX:ATS - Post Discussion

ATS Corp > TD 2

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Post by retiredcf on Feb 10, 2023 2:41pm

TD 2

As I speculated, TD do indeed raise their target by four bucks to $63.00. GLTA

ATS Corporation

(ATS-T) C$52.14

Modest Q3/F23 EBITDA Beat; Record Bookings/Backlog Event

Q3/F23 adjusted EBITDA of $95mm was slightly above the Street at $92mm, and in line with us at $95mm. Relative to our forecast, modest revenue upside, resulting from a slightly faster backlog drawdown, was largely offset by higher SG&A.

Impact: SLIGHTLY POSITIVE

Q3/F23 Results: Revenue increased 18% y/y to $647mm, including solid organic growth of 10%, and a modest FX tailwind. Adjusted EBITDA increased 14% y/y to $95mm (14.7% margin) vs. $84mm (15.3% margin) in Q3/F22, primarily reflecting: 1) a 140bps decrease in the gross profit margin, due to the execution of higher- margin programs in Q3/F22 and supply-chain headwinds in Q3/F23; 2) a 20bps improvement in SG&A as a percentage of revenue; and 3) lower stock-based compensation, which was very elevated in both periods, but declined 80bps y/y as a percentage of revenue.
Record Bookings/Backlog: Bookings of $979mm were up 46% y/y, on impressive organic growth of 38%, driven by large order bookings in the EV space, and also in life sciences. The book-to-bill ratio was 1.51 (vs. 1.29 for the TTM), and the ending backlog was a record $2.1bln, up 45% y/y and 20% q/q. The company's outlook commentary was similar vs. Q2/F23. Funnel activity is strong in life sciences, EVs, and in food and beverage, and ATS has its highest-ever order backlog in food and beverage since entering the space. Activity is stable in consumer products and nuclear. The backlog continues to tilt in favour of EV work, but the life sciences backlog was still a near-record $793mm.
Cash Flow: Working capital improved to 13% of revenue vs. 16% in Q2/F23, due to the receipt of milestone payments on some large EV programs, and ATS' leverage is back within its target range.

TD Investment Conclusion

We view ATS as uniquely positioned to benefit from supply-chain de-risking and see continued scope for margin improvement and M&A upside. We believe that the resiliency and growth potential of the business have meaningfully and sustainably improved over the past five years, which is supportive of multiple expansion, and we anticipate that a U.S. listing over the next 12-18 months will substantially broaden ATS' investor base.