Automation company reports automation orders up

ATS Automation Tooling Systems reported net earnings of $0.4 million on revenues of $148.5 million for the three months ended September 30, 2003 - and healthy growth in automation orders.

ATS Automation Tooling Systems reported net earnings of $0.4 million (1 cent per share basic and diluted), on revenues of $148.5 million for the three months ended September 30, 2003 -- and substantial growth in both new automation systems bookings and order backlog.

"New automation systems orders were up 78% from a year ago, making this the strongest summer quarter for new order activity in our 25 year history," said ATS President and Chief Executive Officer, Klaus Woerner.

"Second quarter new booking activity demonstrates what ATS can do in a more robust economic environment.

When customers are buying, they are buying from ATS and that illustrates the value of the substantial market share gains we've made.

Strong booking activity has allowed ATS, for the first time in 10 quarters, to drive order backlog to the $200 million level.

This bodes well for a stronger performance in the second half of our fiscal year from both a revenue and earnings perspective as we increase our capacity utilization and generate more value from our standard product technologies." Second Quarter Fiscal 2004 Financial Highlights - Consolidated revenue was $148.5 million, up 1% from $146.9 million in the second quarter a year ago reflecting a 63% increase in Solar Group sales and a 9% increase in Precision Components Group revenue which more than offset the impact on revenue of a 12% decline in the U.S.

to Canadian dollar exchange rate over the past year.

The second quarter is typically a seasonal low for ATS due to customer plant shutdowns and vacations.

Cash was $58.3 million versus $75.4 million at the start of the quarter.

Debt to equity ratio at September 30, 2003 remained a very healthy 0.1:1.

New automation systems order bookings were $145 million compared to $82 million in the second quarter of fiscal 2003.

Period end automation systems backlog was $200 million compared to $163 million a year ago and $158 million at the end of the first quarter of fiscal 2004.

Automation Systems Group revenue in the second quarter was $108.6 million, compared to $110.1 million in the second quarter a year ago, reflecting the 12% decline in the U.S.

to Canadian exchange rate over the past year.

At $32.4 million, Precision Components Group revenue was 9% higher than a year ago due to a 667% increase in thermal management device sales, which added $5.4 million in this quarter versus $0.7 million a year ago.

This increase more than offset the impact on Precision Components revenue of foreign currency and customer delays in ramping up new revenue-generating programs.

Solar Group generated revenue growth of 63% to $18.0 million compared to $11.1 million a year ago reflecting strong demand for solar energy products in the European market.

"Second quarter performance was held back by a number of transitional issues," said Woerner.

"In our Automation Systems Group, we won many new orders but we only began to see the real benefits in terms of higher factory utilization levels in late September as the work began to accelerate out of our design departments and into full blown production.

This, combined with $2.0 million in unusual expenses during the second quarter, moderated the Group's short-term operating performance.

Similarly, customer delays in the launch and ramp of new programs hurt the operating performance of our Precision Components Group.

Importantly for the future, we believe these transitional challenges are abating." Looking forward - Woerner said that automation systems order backlog entering the third quarter "provides ATS with a sufficiently large cushion to improve our capacity utilization during the second half of the fiscal year.

This gives us an opportunity to improve revenue and earnings in our Automation Systems Group.

"At $46 million, order booking activity during the first six weeks of the third quarter was down from the unusually strong levels seen during the summer - and this is welcome because it allows our heavily loaded design departments to reduce their backlog - but we continue to see excellent and sizable prospects in our quotation pipeline.

As a result, we are far more optimistic than we've been in many quarters that the downturn has finally come to an end for ATS.

We are ready to maximize the value of a better economic environment while also building potential for greater investment returns over the mid and long-term.

The continued development of our standard automation technologies provides ATS with strong prospects and the ability to deliver value well beyond this fiscal year." In Precision Components, Woerner said "we are particularly pleased that customer volumes are on track under the major automotive seat sub- assembly assignment that we commenced earlier this spring.

This is not entirely the case with a few other new programs in Precision Components where the production schedules customers originally gave us have not coincided with their actual requirements, but these programs have not gone away and we expect them to produce stronger results as volumes increase." To spur continued demand ATS continues to aggressively market its capabilities globally and introduce new automation technologies.

During the second quarter, the Company introduced two new automation technologies -- ATS Servochassis (a high-speed, general purpose assembly platform) and ATS Econotrak (a high speed conveyance system) -- that provide customers with low cost of ownership in fully automated and lean systems environments.

"As the economic recovery expands, Mr.Woerner said "it presents us with an opportunity to showcase the full power of our new standard automation technologies and experienced workforce.

We have never been more prepared to efficiently and effectively answer customer needs and turn demand into strong performance.".

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