Ats Corporation ((TSE:ATS)) has held its Q1 earnings call. Read on for the main highlights of the call.
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The recent earnings call of ATS Corporation presented a balanced sentiment, highlighting both growth and challenges. The company reported steady revenue growth and a significant order backlog, particularly in the Life Sciences and Energy sectors. However, a decline in order bookings and organic revenue, coupled with challenges in the transportation sector and increased expenses, tempered the overall performance, resulting in a neutral outlook.
Revenue Growth
ATS Corporation reported Q1 revenues of $737 million, marking a 6% increase from the previous year. This growth was supported by recent acquisitions and a robust order backlog of approximately $2.1 billion.
Strong Order Backlog
The company ended the quarter with an order backlog of approximately $2.1 billion, providing solid revenue visibility and a strong foundation for profitable growth. Notably, the Life Sciences order backlog alone was $1.2 billion.
Positive Developments in Energy Sector
The energy sector, particularly nuclear, is experiencing positive momentum due to renewed investment and favorable government policy. This includes ongoing CANDU refurbishment and potential growth in small module reactor programs.
Recognition and Awards
ATS was recognized in Time Magazine’s inaugural list of Canada’s best companies for 2025, ranking #1 in the engineering, manufacturing, and medical technology category.
Healthy Life Sciences Funnel
The Life Sciences opportunity funnel remains strong, with successful engagements across submarkets. Comecer continues to be a preferred partner for radiopharma customers.
Decline in Order Bookings
Order bookings fell to $693 million, a 15% decrease compared to the previous year, primarily due to a lower expected run rate in transportation order bookings.
Organic Revenue Decline
Organic revenue growth for Q1 was negative 1.2%, as lower transportation revenues were only partially offset by growth in other sectors.
Challenges in Transportation Sector
The transportation sector faces challenges, with a stable but subdued funnel due to relatively lower demand in the EV end market.
US Government Funding Changes Impacting Lab Research
Changes in U.S. government funding have led some lab research customers to adopt a more cautious approach to capital spending.
Increased SG&A Expenses
SG&A expenses rose to $136.4 million in the first quarter, a $20 million increase over the previous year, influenced by costs from acquired companies and foreign exchange impacts.
Forward-Looking Guidance
ATS Corporation maintains its outlook for fiscal ’26, expecting continued revenue growth and margin expansion. The company anticipates Q2 revenues to be between $700 million and $740 million. The strategic focus remains on expanding repeatable revenue through services and digital offerings, alongside monitoring cross-border tariffs.
In conclusion, ATS Corporation’s earnings call reflected a mix of growth and challenges. While the company demonstrated strong revenue growth and a substantial order backlog, declines in order bookings and organic revenue, along with sector-specific challenges, balanced the positive aspects. The forward-looking guidance suggests optimism for continued growth and margin expansion.