- ATS Automation Tooling Systems Inc. (TSX: ATA) announced their financial results from the previous quarter.
- The company saw a 14% rise in revenue to C$367.2 million
- The company instigated a reorganisation plan to increase capacity and address a large order backlog.
- The plan involved the closing of under-performing facilities.
- These closures caused a C$5 million dip in operating margins
- These short-term negative effects are expected to reverse by 2021
- Despite the increase in revenue the net income of the company was down by around C$12 million
- ATS Automation Tooling Systems Inc. (TSX: ATA) has a current share price of $20.77, which is up 0.24% today
ATS Automation Tooling Systems Inc. (TSX: ATA) has released its third quarter fiscal 2020 results. The company reported a 14% rise in revenue compared to the same period a year previous.
“Third quarter performance featured year-over-year growth in revenues,” said Andrew Hider, Chief Executive Officer.
“Operationally, we initiated a reorganization plan designed to reallocate capital from underperforming facilities to high-performing facilities to support growth and drive continued performance improvement. When complete, this plan will contribute to our margin expansion plans and improve our return on invested capital.”
The C$60 million reorganisation plan was intended to also deal with a significant order backlog the company had built up. Part of the plan involved closing branches and facilities the company deemed to be under performing or not strategically important moving forward.
This move has hit the company in the short term, they estimate the losses from these closures and re-distributing assets to be around C$5 million last quarters and will probably impact this quarter in much the same way.
Although the company has initiated the re-organisation plan, its order back log increased over the last quarters and is currently 1% higher than the year previous. The current order backlog is valued at just under C$1 billion.
The company cites the news acquired businesses as the cause of the backlog growth. The reorganisation remains on-going.
The company has predicted that operating cost benefits will begin to see 15 to 18 million annual improvement from the reorganisation in 2021.
Despite these developments not all metrics were up for the company. Net Income, for example, was down around C$12 million when compared to the same three quarters in the previous year.
ATS Automation Tooling Systems Inc. (TSX: ATA) provides automated solutions for manufacturing companies. It is currently listed on the S&P TSX Composite Index as one of Canada’s largest companies by its market capitalisation, which is currently C$1.91 billion.
ATS Automation Tooling Systems Inc. (TSX: ATA) has a current share price of $20.77, which is up 0.24% today.