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2008 Quarterly Results
ATS reports third quarter results and performance improvement initiatives
Healthcare revenue increased 22%
Computer-electronics revenue declined by 10%
Automotive revenue declined 13%
Energy market increased by 71%,
Other"markets increased 62%.
CAMBRIDGE - ATS Automation Tooling Systems Inc. today reported its financial results for the three and nine months ended December 31, 2007 - as well as a number of initiatives to restore profitability, reduce costs and improve operational effectiveness in fiscal 2009.
Third quarter ASG revenue increased 9% or $9.7 million compared to the
same quarter a year ago. This was expected due to growth in Order Bookings and
Order Backlog experienced in the first half of fiscal 2008.
Strong revenue growth in ASG's Canadian operations was partially offset
by revenue declines in the USA and Europe. Repetitive Equipment Manufacturing
("REM") revenue increased 64% to $13.9 million in the third quarter of fiscal
2008, compared to $8.5 million a year ago, primarily reflecting increased
order flow from existing customers. REM currently earns revenue primarily from
customers in the healthcare industry, but is beginning to expand into the
solar industry.
By industrial market, healthcare revenue increased 22% on strong Order
Backlog entering the quarter. Computer-electronics revenue declined by 10%,
primarily on lower sales in ASG Asia and the USA. Automotive revenue declined
13% reflecting challenges in the North American auto parts sector. However,
ASG's period-end automotive Order Backlog was healthy on orders secured in ASG
Europe. Revenue from the energy market increased by 71%, reflecting increased
penetration into the nuclear and solar industries. Revenue from "other"
markets increased 62%.
Quarter-over-quarter foreign exchange rate changes negatively impacted
ASG revenues by an estimated $12.2 million for the three month period ended
December 31, 2007, compared to a year ago, primarily reflecting a stronger
Canadian dollar relative to the US dollar. The foreign exchange impact for the
nine month period ended December 31, 2007 was $18.1 million compared to the
prior year.
For the nine months ended December 31, 2007, revenue decreased 4%,
reflecting lower Order Backlog entering the current fiscal year and the
negative impact of foreign exchange rates.
These initiatives are as follows:
- Strengthen leadership;
- Fix underperforming divisions and programs;
- Redefine approach to market;
- Revise business processes;
- Realize non-strategic assets.
>>
"Our objective is to improve profitability through fiscal 2009 and then
focus on growth," said Anthony Caputo, ATS Chief Executive Officer. "Specific
actions to improve operational effectiveness will likely impact results
negatively in the next several quarters. We expect significant recurring
benefits as a result of these initiatives."
Major activities that have been completed to date include:
- Recruited ATS CFO, Photowatt CFO, VP Organization Effectiveness, ASG
USA VP & GM, and appointed ASG Canada SVP;
- Authorized euro 20 million for Photowatt capacity expansion and cost
improvements;
- Implemented corporate wide bid review process;
- Implemented monthly, executive level, division and program reviews;
- Sold shares of Canadian Solar Inc. for a gain of $32 million;
- Strengthened balance sheet - no net debt at period end.
>>
The Company also substantially wrote-down PCG by taking $24 million of
non-cash charges in the quarter, including $19.1 million of property, plant
and equipment impairment charges and $4.9 million of provisions against
working capital assets.
Automation Systems Group (ASG) Results
- Period end ASG Order Backlog increased 26% to $211 million from
$167 million a year ago;
- New ASG Order Bookings for the third quarter increased 6% to
$115 million compared to $109 million a year ago;
- New ASG Order Bookings during the first six weeks of the fourth
quarter were $48 million.
ASG's revenues increased 9% in the third quarter compared to a year ago on
high opening Order Backlog. Period-end Order Backlog supports continued
revenue growth. Operating results showed improvements in North America;
however, these improvements were offset by weak performance in Europe and in
Asia.
Photowatt Results
- Total megawatts (MWs) sold at Photowatt France increased to 11.6 MWs
from 8.2 MWs in the third quarter of fiscal 2007 - with MgSi products
accounting for 55% of revenue.
- MgSi module prices increased 4% from the second quarter of fiscal
2008 and were sold at a 0% to 10% discount to polysilicon modules.
- Average cell efficiencies improved in the third quarter to just over 13% for MgSi cells and just over 15% for polysilicon cells.
Photowatt France made good progress in the third quarter with its MgSi
product strategy. The goal is to return Photowatt to acceptable levels of
profitability during fiscal 2009 through focus on increasing cell
efficiencies, scrap rate reduction, the simplification and improvement of
processes using automation know-how, and the elimination of unnecessary
expenses. A measured capital expansion of the existing facility has been
approved to further improve productivity and efficiency and to balance
capacity. Included in Photowatt France's third quarter results are severance
costs of $0.6 million and a $4.2 million provision related to a customer
dispute.
The timing of Photowatt France becoming a standalone company will depend
upon successful performance improvements and market conditions.
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