ATS Corporation Q2 FY2025 earnings call

Financial Value Drivers

• Order bookings $742 million, flat y-o-y; Q2 revenues $613 million, down 17% y-o-y; adjusted earnings from operations $57 million.

Outlook

• Order backlog ended the quarter at just over $1.8 billion; Q3 revenues expected $620 million to $680 million; removed ~$150 million EV backlog due to market conditions.

Acquisitions and Integration

• Ongoing integration of Paxiom and Heidolph; acquired UReality for digital capabilities.

Innovation

• Launched Digital Tomato in food and beverage; Modis in life sciences; SuperTrak improvements in life sciences.

ABM and Employee Engagement

• ABM adoption progressing well across acquired companies like Avidity, Paxiom, and Heidolph.

Order bookings for the quarter were $742 million, flat year-over-year as strong growth in life sciences offset lower EV bookings. Q2 revenues were $613 million, down 17% from Q2 last year. Life sciences backlog was a record $1.1 billion, an increase of 32% compared to Q2 last year. Food and beverage ending backlog for the second quarter was $210 million, an increase of 30% compared to prior year. Energy funnel is strong with refurbishment of existing nuclear reactors and SMR market opportunities. Consumer products funnel remains stable with niche opportunities. Transportation saw lower revenues and cost structure realignment.

Revenue Expectation

• Q3 revenues expected $620 million to $680 million.

Backlog Adjustment

• Removed ~$150 million EV backlog due to reduced North American EV sales growth.

Margin Focus

• Margin expansion priority, expecting sequential revenue growth and operating leverage as reorganization in transportation completes.

• Dispute with EV customer over outstanding payments, with ~$155 million overdue accounts receivable and ~$170 million contract assets at risk.
• Transportation business still facing headwinds until reorganization activities are complete.

Q: Sabahat Khan asks about backlog details and life sciences outlook.

A: Ryan and Andrew discuss backlog adjustments, life sciences growth, and transportation rightsizing.

Q: Justin Keywood asks about EV segment percentage and diversification.

A: Ryan says EV is ~11% of backlog, diversified customer base.

Q: David Ocampo asks about M&A and life sciences revenue recognition.

A: Andrew talks about M&A progress, Ryan explains revenue recognition phases for life sciences projects.

Q: Patrick Sullivan asks about life sciences target mix and recurring revenue.

A: Andrew discusses life sciences focus, recurring revenue range.

Q: Maxim Sytchev asks about transportation market and food beverage decline.

A: Andrew and Ryan talk about transportation rightsizing, food beverage comps.

Q: Michael Glen asks about EV gross bookings and life sciences margins.

A: Ryan provides EV gross bookings, talks about life sciences margins and contract terms.

Q: Patrick Baumann asks about Q3 margins and backlog removal impact.

A: Ryan explains margin expectations and backlog removal details.