On the Rise Cambridge, Ont-based ATS Corp. rose with the release of better-than-anticipated fourth-quarter results that displayed organic growth in backlog and revenue as well as margin improvement.
Before the bell, the maker of industrial automation systems reported revenue totalled $730.8-million, up 21 per cent year-over-year from $603.2-million in the same quarter last year and well above the Street’s projection of $687.3-million.
The company’s order backlog stood at $2.15-billion, up from $1.44-billion a year ago.
On an adjusted basis, ATS says it earned 73 cents per share, up from an adjusted profit of 60 cents per share a year earlier and topping the consensus forecast of 55 cents.
Calling it “another strong print,” National Bank Financial analyst Maxim Sytchev said: “On the back of Rockwell Automation Inc. and ABB Ltd. positive prints, we saw little risk to ATS showing a different trajectory but one, of course, still needs to execute, and we believe the company has delivered on all fronts – organic growth, margin improvement, FCF generation and constructive outlook. We are also mindful that the opportunity set will lead the company to where (excess) growth resides at the moment – EV battery assembly packs; ATS has invested in this market early, reaping the benefits (we believe marginal working capital drag is more than compensated by strong funnel here, including new clients). We continue to see ATS exhibiting a secular growth dynamic even though Healthcare is not the fastest vertical now; we believe this is a temporary dynamic due to tougher comps; EVs are, of course, extremely strong now, Food is looking good again while Nuclear is stable (we view Consumer as more prone to cyclical swings, but we saw good growth here). With generational investments going into North American / European supply chain re-localizations, there are few vehicles to play this thematic in Canada. The scarcity factor should continue to attract investors towards this name, supporting the trading multiple in the process (on top of potential M&A in the U.S. down the line).”