ATS Reports Solid Growth in Second Quarter Earnings from Continuing Operations, Backlog up 26%
CAMBRIDGE, ON, Nov. 4 /CNW/ - ATS Automation Tooling Systems Inc. today reported net earnings from continuing operations of $3.4 million (6 cents per share basic and diluted) for the three months ended September 30, 2004 - up 358% or $2.7 million from $0.7 million (1 cent basic and diluted) a year ago - driven by stronger performances from the Company's Automation Systems and Solar businesses. Second Quarter Financial HighlightsConsolidated revenue increased 30% to $186.9 million from $144.0 million in the second quarter a year ago.Automation Systems Group operating earnings were up 75% to $10.2 million, from $5.8 million in the second quarter of fiscal 2004 on stronger operating margins and a 22% increase in revenue, which stood at $132.8 million.Solar Group operating earnings were $0.5 million, compared to a loss of $0.05 million a year ago on 57% growth in revenue to $28.3 million.Precision Components Group operating loss was $2.3 million compared to a loss of $1.5 million in the same period a year ago, on an 8% increase in revenue to $30.3 million.New automation systems Order Bookings were $154 million, 6% higher than a year ago.Automation systems Order Backlog increased 26% to $252 million versus $200 million at September 30, 2003 and was 9% higher than the backlog at the start of the quarter.Cash flow from operating activities during the second quarter was $46.9 million, and the Company's cash position, net of bank indebtedness, increased $28.7 million from the first quarter of fiscal 2005 to $15.5 million.The Company plans to dispose of its thermal products business during the third quarter of fiscal 2005. Accordingly its results have been accounted for as a discontinued operation. The loss from discontinued operations totaled $3.0 million (5 cents per share) in the quarter. This included a $2.0 million after tax, non-cash charge to write down the value of the thermal products business assets to their estimated net realizable value.Net earnings were $0.4 million (1 cent basic and diluted) compared to $0.4 million (1 cent basic and diluted) a year ago.The Company estimates changes in foreign currency exchange rates reduced second quarter net earnings by $2.4 million (4 cents per share) and revenue by $7.8 million compared to the second quarter of fiscal 2004."Our Automation Systems Group (ASG) performed very well in the second quarter-with strong year-over-year gains - as did our Solar business," said Klaus Woerner, ATS President and Chief Executive Officer. "Even more positive is the fact that even though the summer is our weakest period because of lost production time and lower shipments, ASG achieved a 60% improvement in operating earnings compared to the first quarter of this year. Stronger operating results were registered in all geographic regions compared to the first quarter of this year and ASG also benefited from better utilization and improved performance in some of the facilities that have lagged the recovery experienced by our larger and more established facilities in Canada and the Eastern United States. Best of all, this momentum is still growing and we expect to see more performance gains going forward. Quotation activity remains strong and near record high order backlog provides a solid foundation for expected continued gains in the second half of fiscal 2005."The performance of the Company's Precision Components Group weakened in the second quarter, said Mr. Woerner, "reflecting summer shutdowns and industry wide challenges including pricing, rising material costs, fluctuating demand and, for us in Canada, a declining US dollar. We have fought back with cost cuts, labour reductions, productivity enhancements, raw material surcharges, and a global sourcing strategy. The benefits realized from these initiatives to date have been quite limited. However we expect to see growing contributions from these steps during the second half of this year. We also expect to complete the sale of PCG's underperforming thermal products business shortly. This is an important step in our plans to return PCG to profitability."In addition Mr. Woerner said the Company's solar business remains on track to make a record contribution to ATS earnings this year. "Despite losing a full month of production to traditional European vacations and incurring costs to bring on new capacity," he said, "our solar business remained profitable and made a solid contribution to consolidated earnings in the second quarter."For Solar Group, Mr. Woerner added: "Demand for solar modules is extremely strong and with the summer period behind it, we expect Photowatt to take full advantage of market potential through the second half of this year.Our Spheral Solar Power initiative is also progressing and demand for SSP products is building. We shipped our first product - a flexible module for marine, recreational and off-grid energy applications - at quarter end. Our production equipment commissioning is moving forward and while we expect volumes will be modest for now, we expect more meaningful shipments to occur as we get deeper into the fiscal year."Overall we expect ATS to generate stronger earnings during our second half. While the Precision Components Group continues to face tough challenges, we also expect to see benefits from the various initiatives we have undertaken. As well, our Automation Systems and Solar businesses, which currently comprise over 80% of our consolidated revenue base, have made excellent progress this year in growing their earnings and we believe that both are very well positioned to generate stronger earnings through the second half of fiscal 2005."Quarterly Conference CallATS will hold its quarterly conference call at 10 am eastern time today. To listen to a live audio webcast of the call, please visit www.atsautomation.com.
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