Annual Report 2017
Delivering Value Through Team Execution

$40 million agreement to design, deliver and install new automated medical device technology

ATS delivers complete manufacturing solutions for customers on an enterprise and/or project basis.

Our diagnostic technologies and integration capabilities support the smart factory of the future.

After-sales services bookings grew every quarter in FY2017.

photo of Andrew Hider Our goal is to drive long-term shareholder value through the generation of profitable growth, both organically and through acquisition.
A Message From the CEO

Fellow Shareholders,

When joining ATS in March this year, I committed to our Board that I would delve deeply into our business to understand and assess our areas of strength and where we can improve. This included developing a clear understanding from our customers of the value we bring to their businesses and where we can expand the products and services we provide.

During this period, I have visited most of our facilities, met with our business leaders from around the world and spoken with many of our 3,500 employees through town halls and several employee roundtables. I have also spent time with several customers, shareholders and stakeholders.

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ATS is made up of an impressive group of employees who are highly engaged, highly motivated and highly skilled. Our people are passionate and proud of the work they do as builders of innovation and technology. We have a strong operating base with the ability to deliver innovative and high-quality technology and automation solutions to our customers globally. Our customers are leaders in their markets, and they depend on ATS as a strategic technology partner that enables them to execute on their strategies. They are pleased with the quality of the work we do, the innovative manufacturing solutions we produce and our extended service programs.

Our ability to innovate, our global footprint and our core technologies provide us with advantages in a market that is populated by competitors who are more closely aligned with a specific industry or region.

These are advantages that I expect will serve us well as we move to the next level of performance to drive long-term shareholder value creation.

Review of 2017 Performance

While ATS’s automation business has been consistently profitable, there is room for improvement. This past year, our revenues decreased 3% and our adjusted earnings from operations margin was lower by 1.4 percentage points. The management team and Board are not satisfied with these recent results and I will not be satisfied with the status quo. In particular, we need to do a better job of presenting our global value to all customers, and we need to improve the utilization of our global capacity, which includes further developing our talent around the world and improving our organizational structure. Taking the right steps in each case will further strengthen our foundation.

Despite slight year-over-year declines in revenues and profitability, a number of our key indicators have never been stronger. We have a record Order Backlog of $681 million entering fiscal 2018. Order Bookings for fiscal 2017 were $1.1 billion, up 6% over last year.

We had several significant and strategic wins within our Order Bookings during the year. One of these key wins is a program announced in September for an industry-leading, North American–based medical device company valued at approximately $40 million, which involves the design, delivery and installation of a new manufacturing system that is based on ATS’s proprietary technology. This unique technology facilitates reliable, high-volume manufacturing requirements in a compact footprint. We received a follow-on Order Booking from this customer in March.

As well, we announced a multi-year master tooling agreement with Bruce Power for the supply of automated tooling systems and related services for Bruce Power’s Life-Extension Program. This is a long-term agreement with initial orders valued at approximately $40 million, and the potential for future orders.

Our balance sheet is strong with $287 million of cash and $639 million of available credit at the end of fiscal 2017. We have sufficient flexibility to grow ATS both organically and through acquisition. Our approach to deploying capital will be both disciplined and strategic.

Going Forward

Our goal is to drive long-term shareholder value through the generation of profitable growth, both organically and through acquisition. I am working with our management team and the Board to review and build upon the Company’s strategies to drive ATS to the next level of performance. We will communicate our plans once we’ve completed the necessary work, reviewed and have approval from our Board.

What I can share with you is the framework through which we will drive ATS: People, Process, Plan, Performance and Customer:

  • People: Making sure we have the right people in the right roles and developing our pipeline of talent throughout the organization.
  • Process: Aligning around a common set of policy-driven business processes that we will use to drive continuous improvement in our operations.
  • Plan: Delivering and driving profitable growth through a rigorous strategic planning process, led by our people, that targets incremental and continuous improvement.
  • Performance: Constantly and consistently measuring our performance and course correcting to ensure we meet the high expectations we set for ourselves and the high expectations that our customers, shareholders and other stakeholders have of us.
  • Customer: The underlying principle for each of the P’s. Customer includes both the companies that buy from us and the shareholders who own our business. Listening to, anticipating and meeting each customer’s needs will be at the core of everything we do. And for our shareholders, we will operate the Company to deliver long-term shareholder value.

Each of these areas is critical and provides the basis for how we will operate and guide ATS in fiscal 2018 and in the years ahead. We will develop and drive improvement in all of these areas within ATS and I am confident that they will support the performance of our business as we grow organically and complement that growth with strategic acquisitions. Our pursuit of acquisitions will be well disciplined and our evaluation of candidates will be based on well-defined criteria that I have found to be effective in my time as a leader. Today, we have a good pipeline of prospects and will need to be prepared to act when the opportunities arise.

Summary

While the future of the global economy is difficult to predict, it has never been a better time for innovation, technology and automation. ATS is perfectly positioned to continue to deliver innovative and high-quality technology and automation solutions to our customers globally.

In closing, I’m very excited about the opportunity ahead for ATS. This is a world-class company with a strong history of innovation and quality. Our employees are our number one asset, and they are highly engaged and proud of the work they do at ATS. Prospects in our markets are strong. Our operating foundation is solid. Our skilled and independent Board of Directors is committed, along with our management team, to build on these competitive strengths in the months and years ahead.

Sincerely,

Andrew Hider
Chief Executive Officer
ATS Automation
May 18, 2017

Performance Highlights
(in millions of dollars, except per share data)
Fiscal 2017 Fiscal 2016 Fiscal 2015
Revenues $1,010.9 $1,039.6 $936.1
Earnings from operations $71.9 $76.8 $67.0
Adjusted earnings from operations1 $97.1 $114.4 $109.8
EBITDA1 $106.5 $116.1 $107.5
Net income from continuing operations $35.0 $39.6 $38.9
Earnings per share – basic from continuing operations $0.38 $0.43 $0.43
Adjusted earnings per share1 $0.57 $0.72 $0.77
Order Bookings $1,134 $1,070 $981
Order Backlog $681 $652 $632

1 Non-IFRS measure

ATS is listed on the Toronto Stock Exchange under the symbol “ATA”.

ATS Worldwide
world map with locations

Manufacturing Facilities

North America

  • Wixom
  • Cambridge
  • Woodbridge
  • Parsippany
  • Lewis Center
  • Rolling Meadows
  • Dayton
  • Rock Hill

Europe

  • Neuwied
  • Ludwigshaffen
  • Stutensee
  • Winnenden
  • Lutherstadt
  • Lichtentanne-Stenn
  • Munich
  • Ingolstadt
  • St. Georgen

Asia

  • Tianjin
  • Samutprakarn
  • Penang
  • Singapore

ATS’s competitive advantage begins with our people. For more than 35 years, our team of experienced professionals, leaders and highly skilled experts has delivered value by collaborating with customers to create and build some of the world’s most technologically advanced and innovative automation solutions.

Our multi-region global footprint allows us to be closer to the customer, building and delivering total turnkey solutions anywhere around the globe. It also positions us well to serve those customers looking to replicate, expand, relocate and/or repatriate automated manufacturing processes.

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Global Footprint

Our 23 manufacturing facilities and over 50 sales and service offices in North America, Europe, Southeast Asia and China deliver automation solutions anywhere in the world.

Experience

We have more than 35 years of experience providing technology and innovative end-to-end automation solutions that solve customers’ most complex challenges.

Innovation

ATS has a rich history of being a world leader in designing and building custom-engineered technologies and innovative automation solutions across diverse sectors.

Scale

Our experienced team of 3,500 employees – including almost 1,400 engineers and nearly 200 program managers – and a vast network of highly skilled partners and suppliers are our biggest competitive advantage.

Quality and Compliance

ATS has been registered to the ISO 9000 generation of standards for more than 15 years. We maintain a global registration to 9001 and have expanded to ISO 13485, ISO 14001 and VDA registration for several key divisions. In addition, ATS has incorporated a quality management system compliant to CSA Z299.1-85, B51 and N285 within its Cambridge Division. We also apply good manufacturing practices (GMP) to our life sciences projects.

Business Review
A loyal customer base with approximately 90% of bookings in FY2017 placed by repeat customers

ATS Capabilities

Automation helps advance the future by fuelling the development of new products and services, improving product safety and reliability, reducing costs, increasing productivity and growing opportunities for highly skilled jobs. At ATS, we apply our extensive experience and global capabilities in delivering innovative and high-quality technology and automation solutions to help multinational customers transform their manufacturing operations.

ATS offers complete end-to-end solutions, allowing customers to single-source their most complex projects. We complement our automation/integration capabilities with value-added pre-automation consulting and post-automation support services.

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Pre-Automation

Our pre-automation experts help customers clearly define their manufacturing strategy. Whether installing standard machines or building a customized solution to address a unique problem that cannot be solved with an off-the-shelf product, we work to truly understand the customer requirements and provide a comprehensive, data-driven analysis that helps guide the project forward.

Discovery and Analysis

We begin by working with the customer to review all factors and considerations, identify and assess options, and develop an optimal manufacturing strategy.

Concept Development and Simulation

The next step is to create concepts of how the project will be integrated into the customer’s manufacturing process. We then conduct simulations and testing to mitigate risks and develop confidence in the solution before the equipment is built.

Automation/Integration

Our extensive automation/integration offerings include:

Design Build

Our team has the experience and knowledge to create innovative new manufacturing solutions where existing commercial options are unavailable or insufficient.

Engineer and Integrate

ATS combines technologies and products into complete automated manufacturing solutions.

Process and Facilities Control Systems and Software Integration

We build systems that provide crucial information about performance, and we can link equipment to customers’ systems for fully automated reporting and lot/batch handling. The ATS Overall Equipment Effectiveness (OEE) Toolkit is a powerful web-based tool that gives customers a real-time view of their overall equipment effectiveness, allowing them to drive improved performance.

Product and Technology Portfolio

ATS’s standard automation products offer breakthrough performance and are core to our customers’ central processes. These include Flexsys Lasers, SuperTrak modular conveyance systems, LogiTrak electrified monorail, sortimat Cleanliner handling technology, sortimat Birkman feeders, ATS SmartVision software, ATS Cortex hardware and high-speed tube filling and cartoning machines.

Build to Print

For customers without in-house equipment fabrication capabilities, we build advanced equipment manufacturing systems based on their specifications.

Supply Chain Management

We prequalify and continuously monitor our global network of best-in-class suppliers and leverage our global purchasing power to obtain the best possible pricing and lead times for each project.

Commissioning and Validation

ATS expertly installs equipment and ensures all critical control technologies, software and system performance attributes are tested, documented, optimized and achieved. This includes validation for regulatory compliance.

Post-Automation

Our post-automation services are a true differentiator in the industry and one of our greatest growth opportunities, especially as the smart factory concept becomes a reality.

Our post-automation support services help deepen, grow and sustain our customer relationships by maximizing the performance, efficiency and uptime of their automation projects. Expanding our offerings and global service network are key focus areas for us.

Current post-automation offerings include:

Technical, Customer and Time-Critical Support

Our global footprint and experienced team of technicians provide customers with total support solutions whenever and wherever needed. This includes providing remote diagnostics, critical analysis and response in downtime situations.

Connected Factory Technologies

Remote support and diagnostic tools monitor performance and help production lines quickly get back up and running. Our proprietary ATS OEE Toolkit uses web-based technology that allows customers to measure their system’s overall equipment effectiveness from any connected device and take action in real time to drive improved performance.

Knowledge Transfer and Training

We ensure our customers’ in-house personnel have the proper skills to operate and maintain their systems safely, efficiently and effectively. Our professional instructors provide training on site or at our world-class training facility in Canada.

Preventative Maintenance

ATS offers preventative maintenance services that identify and address issues before they cause downtime. On-site support and independent audits of personnel skills, specific stations or entire systems are among the options available.

Spare Parts

As a world leader in automation, we can save customers time, hassle and expense by serving as a single source for all spare parts and can leverage our global footprint to offer value to our customers. Our support options include a dedicated contact, a basic recommended spare parts list and field replaceable units.

Upgrades, Retrofits and Moves

We provide engineering, design, manufacturing and installation services for customers requiring modifications to existing systems. We also have extensive experience working with our customers to relocate capital equipment.

Documentation

Every ATS technology and solution can be supported with a comprehensive suite of documentation that details the required knowledge necessary to maintain optimal system performance. Services also include archiving, language translation and writing functional specifications.

Markets Served

ATS’s broad experience serving as a strategic technology partner to leading multinational customers across multiple industries is a unique competitive advantage. As a diversified automation and technology company, we are able to apply the knowledge gained from all sectors to every ATS program.

When a customer has a problem that no current solution can solve, we work with the customer to understand the issue, identify success criteria and follow a structured engineering approach to design, build and implement an innovative solution.

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Our four key market segments include life sciences, energy, transportation, and consumer products and electronics.

ATS is a single-source provider of innovative automation solutions that help customers achieve their goals, such as lower production costs, faster speed to market, safer operations and improved quality control. We offer a wide range of automation and integration services and also provide duplicate or “repeat” automation systems that leverage the engineering design completed in the original customer program.

While we are well positioned to continue to address key market opportunities through technology and innovative automation solutions, we recognize that we must truly understand our customers’ needs today and in the future and continually improve the customer experience to create value for both our customers and shareholders.

Building Excellence in the Life Sciences Industry

Life sciences companies face increasing competition, pricing pressures and regulations from governing agencies. ATS works with global leaders in biotechnology, pharmaceuticals and medical devices to design and build automation solutions and services that increase the efficiency and productivity of their manufacturing processes.

The life sciences market is a great opportunity for our business because it showcases the experience our team has in using technology to solve problems. For example, during the past year, we worked with a customer on a new lifesaving medical device. The customer knew what the device needed to do, but required guidance on how to build and produce it in a high-quality and efficient manner. We collaborated with them to develop a solution that automated the device’s production in a manner that followed qualification and validation protocols, met strict regulatory requirements, improved reliability and increased production to meet the growing demand at a competitive total value.

Advancing the Future of Energy

ATS has been a trusted automation solutions provider to the nuclear industry for more than 15 years. We also have deep experience working with chemical, oil and gas, water, wastewater and solar customers who need specialized end-to-end support to meet their production goals and regulatory requirements.

In 2016, we expanded our relationship with Bruce Power – the world’s largest operating nuclear facility – signing a master tooling agreement to build automated solutions for the nuclear power plant’s Life-Extension Program, with initial orders valued at approximately $40 million. Supporting this agreement is the knowledge ATS gained from working with Bruce Power in the past and on the development and integration of the Bruce Reactor Inspection and Maintenance System, a remotely operated automated machine that safely inspects tubing within a reactor and replaces parts, if required.

Driving Transportation Automation

ATS has engineered more than 6,500 assembly systems responsible for building the components that are critical to making vehicles run. We also provide heavy equipment manufacturers with accurate and cost-effective manufacturing, assembly and test systems, and integrated process controls.

While our FY2017 revenues in the transportation segment were down from the previous fiscal year, we see significant opportunity in this segment as demand shifts from conventional to electric and hybrid vehicles. Our E-Motor and Lithium Ion Battery solutions support the global push for improved fuel economy. During the past year, we launched five major automation projects involving the electrification of cars. Our focus in this segment is to pursue opportunities where we can leverage our experience, expertise and innovative solutions to drive true technological advancement.

Meeting Demand for Consumer Products and Electronics

ATS continuously strives to be at the forefront of trends in automation technology to help leaders in consumer goods and electronics achieve success in their highly competitive markets. Our manufacturing platforms include high-volume assembly, which improves reliability and time to market, as well as packaging, dispensing and web handling.

One example of how we have helped a consumer goods customer occurred when a customer selected ATS to develop a fully automated line for their product’s motor. The project required automating four different assembly stages involving glue dispensing and curing. Implementation of the solution resulted in improving the customer’s time to market by 20% and increasing production capacity to help the customer gain market share.

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