ATS Corp (ATS) Q4 2025 Earnings Call Highlights: Record Order Backlog and Strategic Growth Amid ...
Order Bookings: $863 million in Q4, up 9% year-over-year; full-year bookings at $3.3 billion.
Adjusted Revenues: $721 million in Q4, down 9% from the previous year.
Adjusted Earnings from Operations: $74 million in Q4; $283 million for the full year.
Order Backlog: Approximately $2.1 billion at the end of Q4.
Book-to-Bill Ratio: 1.23:1 for the trailing 12 months.
Gross Margin: 29% in Q4, a 90 basis point improvement from the previous year.
SG&A Expenses: $133.9 million in Q4, an increase of $11.2 million year-over-year.
Adjusted EPS: $0.41 in Q4.
Cash Flows from Operating Activities: $39.3 million in Q4.
CapEx and Intangible Investments: $29 million in Q4; $78.1 million for the full year.
Net Debt to Adjusted EBITDA Ratio: 3.9 times at the end of Q4.
Warning! GuruFocus has detected 8 Warning Signs with ATS.
Release Date: May 28, 2025
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
ATS Corp (NYSE:ATS) reported a record order backlog of approximately $2.1 billion, the highest in the last 8 quarters, providing strong revenue visibility for fiscal 2026.
The company achieved its finest bookings quarter in history, with order bookings for the quarter reaching $863 million, up 9% from the previous year.
ATS Corp (NYSE:ATS) demonstrated strong performance in its Life Sciences segment, with a robust opportunity funnel supported by market growth in key submarkets.
The company successfully negotiated a settlement with an EV customer, resulting in a significant cash inflow that will reduce net debt and provide greater financial flexibility.
ATS Corp (NYSE:ATS) continues to expand its market reach and recurring revenue through strategic acquisitions, such as Paxiom and Heidolph, enhancing its product portfolio.
Adjusted revenues for Q4 were down 9% year-over-year, primarily due to lower EV revenues, impacting overall financial performance.
Geopolitical and trade tensions are creating an uncertain macroeconomic environment, which could potentially impact demand in some areas of ATS Corp (NYSE:ATS)'s business.
The transportation segment experienced lower revenue volumes, contributing to a 23% decline in adjusted earnings from operations in Q4 compared to the prior year.
ATS Corp (NYSE:ATS) faces challenges in managing working capital efficiency, particularly with the integration of recent acquisitions that are more working capital intensive.
The company is navigating a complex tariff landscape, which requires ongoing efforts to mitigate risks and manage potential cost increases.
Q: As you look at the backlog and the underlying duration of it, how confident do you feel about returning to positive organic growth in fiscal '26? A: Andrew Hider, CEO: We are very positive about returning to growth. Our trailing 12-month book-to-bill ratio of 1.23 supports this alignment, with all markets above 1. We are confident in the areas we are supporting and have seen continued investment from customers in strategic priorities. Overall, we are cautiously optimistic about the year.
Q: Can you talk about the internal control deficiency noted and how it was identified? Was it related to the EV settlement accounting treatment? A: Ryan McLeod, CFO: It was identified through our normal course process, as this is our first year under SOCs requirements, which are more rigorous. It largely relates to documentation improvements needed around spreadsheets. Importantly, it had no impact on our financial statements, and we are focusing on addressing these documentation improvements in fiscal '26.
Q: Can you provide color on the composition of programs within the healthcare backlog, particularly regarding the sustainability of GLP-1 growth? A: Andrew Hider, CEO: We are excited about our support in the GLP-1 space, working with 8+ customers. We view this as a short- to mid-term growth area. Beyond GLP-1, we are involved in radiopharmaceuticals, wearable devices, automated pharmacy, and contact lenses, which provide a diversified growth potential.
Q: How should we think about working capital intensity and velocity of improvement, especially with the transportation business shrinking? A: Ryan McLeod, CFO: Excluding the EV settlement, our working capital is just over 15%. Transportation is more working capital intensive, but as it becomes a smaller part of our business, we see benefits. However, product-based businesses like Paxiom and Heidolph are more working capital intensive. Our target is to be below 15%, and we have initiatives to support this progress.
Q: With the EV situation resolved, is it the right time to divest the EV business? A: Andrew Hider, CEO: The EV business has been rightsized to reflect current demand and is set up for success. Our work in this area is focused on factory automation, and with potential reshoring of manufacturing, there are opportunities in factory automation beyond this segment. We have good capabilities and can create value for customers and shareholders.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
This article first appeared on GuruFocus.
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