ATS reports third quarter fiscal 2010 results

CAMBRIDGE - ATS Automation Tooling Systems Inc. today reported its financial results for the three and nine months ended December 27, 2009.

Third Quarter Summary

- Consolidated revenue was $138.1 million compared to $148.2 million in the second quarter of the fiscal year and $221.7 million in the third quarter a year ago;

- Consolidated earnings from operations were $4.7 million compared to $9.3 million in the second quarter of the fiscal year and $18.4 million in the third quarter a year ago;

- Per share earnings were $0.04 (basic and diluted) compared to $0.07 (basic and diluted) in the second quarter of the fiscal year and $0.16 (basic and diluted) in the third quarter a year ago;

- The balance sheet remained strong with cash net of debt of $122.5 million compared to $106.5 million at March 31, 2009 and $45.8 million at December 31, 2008;

- In December, the Company announced the establishment of Photowatt Ontario as part of its plan to serve the Ontario solar energy market. Photowatt Ontario has built an initial project development pipeline and submitted a number of feed-in tariff applications to the Ontario Power Authority.

In the Automation Systems Group segment ("ASG"), third quarter Order Bookings increased 30% compared to the second quarter, however, many of ASG's customers are continuing to push-out spending and delay investment decisions. This will continue to cause volatility in Order Bookings and put pressure on revenues in the short-term. In Photowatt Technologies, sales volumes improved in the third quarter by 21% to 12.8 megawatts ("MWs") from 10.6 MWs in the second quarter. Notwithstanding this improvement in MWs sold, recently announced reductions in solar feed-in tariffs in Germany and France, combined with tight credit markets for solar installations will put further pressure on solar module demand and average selling prices, which will continue to impact Photowatt Technologies revenue and operating margins. "In the third quarter, we continued to experience challenging market conditions which negatively impacted Order Bookings and revenues in both ASG and Photowatt Technologies," said Anthony Caputo, Chief Executive Officer. "Despite these circumstances, we continued to operate profitably during the quarter. Based on the activity we are seeing now in ASG, I believe that the Order Bookings deterioration we have experienced has moderated and growth should slowly follow."

ASG Third Quarter Results

- Revenue was $78.6 million compared to $97.0 million in the second quarter and $144.1 million a year ago;

- EBITDA was $10.0 million compared to $15.3 million in the second quarter of this fiscal year and $16.8 million in the third quarter a year ago;

- Earnings from operations were $8.4 million (operating margin of 11%) compared to $13.6 million (operating margin of 14%) in the second quarter of this fiscal year and $14.7 million (operating margin of 10%) in the third quarter a year ago;

- Period end Order Backlog was $203 million, an increase of 3% from $197 million in the second quarter of this fiscal year and down from $282 million a year ago;

- Order Bookings were $92 million compared to $71 million in the second quarter of fiscal 2010 and $157 million in the third quarter a year ago;

- Order Bookings were $46 million during the first six weeks of the fourth quarter.

Despite a 45% year-over-year decrease in revenues in the third quarter, ASG's operating margin was 11% reflecting cost reductions implemented during fiscal 2009 and 2010, supply chain savings and improved program management. Revenue increased 27% in the healthcare industry, offset by decreases of 49% in computer-electronics, 72% in energy, 67% in automotive, and 68% in other markets (primarily consumer products).

Photowatt Technologies Third Quarter Results

- Photowatt Technologies revenue was $59.7 million, a 16% increase over fiscal 2010 second quarter revenues of $51.5 million, but down from $79.7 million in the third quarter a year ago;

- Photowatt Technologies EBITDA was $5.7 million compared to EBITDA of $4.7 million in the second quarter of fiscal 2010 and EBITDA of $11.7 million in the third quarter a year ago;

- Photowatt Technologies operating earnings were $1.6 million (operating margin of 3%) compared to operating earnings of $0.6 million (operating margin of 1%) in the second quarter of fiscal 2010 and operating earnings of $7.7 million (operating margin of 10%) in the third quarter a year ago;

- Total megawatts (MWs) sold increased 21% to 12.8 MWs from 10.6 MWs in the second quarter of fiscal 2010, and were 22% lower than the 16.4 MWs sold in the third quarter a year ago.

The 25% year-over-year decline in revenues reflected lower MWs sold and lower average selling prices. Photowatt Technologies partially mitigated the impact of lower average selling prices through increased systems sales, which were up by 71% to $38.5 million from $22.5 million a year ago. Total polysilicon products represented $59.7 million or 100% of fiscal 2010 third quarter revenue compared to $22.6 million or 28% a year ago, as production was rebalanced towards polysilicon products to take advantage of better raw material pricing.