Automation systems orders and backlog increase

ATS Automation Tooling Systems reported sharp increases in revenue, operating earnings, automation systems order bookings and order backlog in its first quarter 2004 results.

ATS Automation Tooling Systems has reported its financial results for the three months ended March 31, 2004, including sharp increases in revenue, Operating Earnings, Automation Systems Order Bookings and Order Backlog.

Due to the significant negative impact of changes in foreign currency exchange rates, which reduced fourth quarter net earnings by an estimated $4.7 million (8 cents per share), and unusual charges of $5.9 million after income taxes (10 cents per share), net loss for the three months ended March 31, 2004 was $3.1 million (5 cents per share basic and diluted).

Excluding unusual charges, net earnings were $2.8 million (5 cents per share) compared to $0.9 million (2 cents per share) in the fourth quarter of last year.

Fourth quarter financial highlights: * Consolidated revenue increased 40% to $193.7 million from $138.0 million in the fourth quarter a year ago, despite the impact of foreign currency which reduced revenue by an estimated $20.3 million.

* Automation Systems Group revenue grew 34% to $134.6 million from $100.1 million.

Strong revenue growth was achieved in all of the Group's core markets compared to last year.

Healthcare revenue was up 86%, automotive 8%, computer-electronics 31%.

* Precision Components Group revenue was 24% higher at $41.2 million compared to $33.3 million, primarily reflecting growth in automotive revenues.

* Solar Group revenue increased 170% to $26.1 million from $9.6 million, as the Company's Photowatt International operations benefited from strong demand in Europe.

* Operating earnings increased 164% to $4.5 million from $1.7 million in the same period last year, reflecting the strong revenue growth and significantly higher operating earnings generated in Automation Systems and Solar groups which more than offset weaker operating performance in Precision Components Group and the substantial negative impact of changes in foreign exchange rates.

* New automation systems Order Bookings were a record high $184 million, up 50% over the previous fourth quarter.

* Automation systems Order Backlog was up 41% to $227 million.

* Unusual charges in the fourth quarter of fiscal 2004 totaled $7.5 million before tax ($5.9 million after tax, or 10 cents per share) and included a $2.8 million ($1.8 million after tax) charge for non-income related tax re-assessments (which ATS is appealing), a $2.7 million ($2.7 million after tax) write down for permanent impairment in value of a portfolio investment, and a $2.1 million ($1.4 million after-tax) charge to write down the value of certain redundant production equipment to its estimated net realizable value.

Net loss a year ago included a $4.8 million ($4.8 million after tax) write down for permanent impairment in value of a portfolio investment and a $1.2 million ($0.8 million after tax) charge to write down certain production equipment.

* Net loss, including the unusual charges, was $3.1 million (5 cents per share basic and diluted), compared to net loss of $4.6 million (8 cents per share basic and diluted) in the fourth quarter of fiscal 2003.

"ATS has worked hard to ignite growth, expand its presence in high-demand markets and improve the utilization and efficiency of our worldwide resources," said Klaus Woerner, ATS President and Chief Executive Officer.

"On an operating basis, the fourth quarter indicates these efforts are beginning to pay off and that there is room for substantial further improvement in numerous areas.

To drive earnings higher, we are focused on taking advantage of our improved automation systems Order Booking activity, healthy Order Backlog and good order prospects in our Automation Systems Group.

In our Precision Components Group we are committed to reducing costs and increasing our profitability to offset competitive pressures, including the significant impact that currency has on this business.

And, we intend to continue to take full advantage of the strong demand in solar markets.

These are our key objectives for the new fiscal year." Looking forward - "Overall, our outlook is much improved compared to last year at this time and we expect to build a solid earnings recovery in fiscal 2005 based on the significantly increased size and quality of our Order Backlog, and the most robust and healthy quotation activity we've seen in many years," said Woerner.

"Beyond the substantial improvement we realized in the fourth quarter in Canada, better market conditions should allow us to improve the level of factory utilization into Europe and the US and they have also enabled us to become much more selective in the orders we are pursuing.

All of this is expected to be positive to our operating margins and earnings going forward." In Automation Systems Group, Woerner said the Company is enjoying the benefits of improving demand for capital goods and "the tremendous market share gains ATS has made in all markets, but, particularly in healthcare.

The four significant healthcare project announcements we recently made, (reflecting orders ATS won in the fourth quarter of fiscal 2004) including the US $34 million assignment we recently announced - are an excellent indicator of this potential." Woerner said the Group continues to enhance its profitable growth prospects "through new service offerings (such as ATS Compliant Solutions), new technologies (such as Vaporous Hydrogen Peroxide-compatible robotics for aseptic applications and a new vision inspection system for healthcare applications) and the aggressive pursuit of high quality repeat orders.

As well, we are now planning for the expansion of our already existing capacity in Asia-Pacific to meet the needs of customers who are increasing investment there.

This will allow us to take advantage of the market growth and lower costs in the region.

This facility will focus on building repeat automation systems.

To support this important initiative, we have purchased two acres of land in Penang, Malaysia and are designing an estimated 50,000ft2.

facility to replace our existing 12,000ft2.

of leased space within the next 12 months." Woerner added that "in Canada, our automation systems facilities are now working at substantially higher utilization levels, which has significantly helped operating margins.

Factory utilization during the fourth quarter, especially in some of our US and European operations was still sub-optimal however we expect that with the higher backlog and better market conditions, we expect to see meaningful improvements in fiscal 2005." Precision Components Group continues to be challenged by the high value of the Canadian dollar and global competitive pricing pressures for automotive components.

However, the Group is making substantial headway in the ramp up of new programs, including its multi-year automotive seat sub-assembly system contract that began commercial production during fiscal 2004 and generated over $16 million of revenue in the year, surpassing our revenue target of $12 million to $15 million in spite of the negative impact of foreign exchange.

Based on the customer's forecast data, revenues from this program are expected to grow significantly in fiscal 2005.

"In Solar," said Woerner, "we are very pleased with Photowatt's rapid progress during the second half of fiscal 2004.

It was a strong contributor to Company revenue and profitability in the fourth quarter and we expect this to continue.

Our goal is to sustain this progress as we introduce the market to Spheral Solar Power technology.

The last few months have been very productive for SSP.

The factory is complete, the installation of the production equipment and process development is progressing well, and the response from prospective customers to our product development and marketing activities has been exceptional.

As previously indicated, we expect to commence initial shipments of SSP this summer." Corporate description - ATS Automation Tooling is the industry's leading designer and producer of turn-key automated manufacturing and test systems, which are used primarily by multinational corporations operating in a variety of industries including: automotive, computer/electronics, healthcare, and consumer products.

The Company also makes precision components and sub-assemblies using its own custom-built manufacturing systems, process knowledge and automation technology.

ATS is also an emerging leader in the rapidly growing market for solar energy cells and modules.

ATS employs approximately 3,800 people at 26 facilities in Canada, the United States, Europe and Asia-Pacific.

The Company's shares are traded on The Toronto Stock Exchange under the symbol ATA.

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