Chief Executive Officer
As this report is being written in the spring of 2020, economies around
the world, shut down by the global pandemic, are starting to take the first steps toward reopening. The hope shared everywhere is that the world will make this transition successfully while remaining vigilant and prudent. For the last several months, ATS has been working with customers around the world, enabling them to overcome capacity constraints and supply chain shortages. We are helping them turn their focus to manufacturing products that are essential to meeting the challenges of COVID-19, items like test kits, personal protective equipment, ventilators and respirators. I cannot think of a better demonstration of the commitment of our employees or a more precise embodiment of the term “work with purpose.”
Like every business, we continue to be affected by the pandemic. Inevitably, there were impacts on our performance. However, for ATS, the pandemic’s most significant impact was what it revealed about the resilience of our people, the underlying strength of our business and the value of the ATS Business Model.
2020 Financial Performance
ATS enjoyed strong performance for most of FY2020, but as the year came to a close, we began to feel the impact of the COVID-19 pandemic. At this point, no one is certain about the timetable for global economic recovery, but we can be sure of challenging times ahead. However, I am fundamentally an optimist. While I accept that the world may be changed, I believe in the long-term possibility of change for the better.
For the third year in a row, we achieved double-digit growth (14%), with substantial revenues of $1,429.7 million. Our Order Bookings for the year were $1,468 million, 4% higher than FY2019, and Order Backlog at year end was $942 million, also a 4% increase over last year. As a percentage of revenues, our Working Capital of 12.3% was within our target range for the year.
As part of our growth strategy, we continually look at how we deploy capital to confirm that it is generating the results needed to meet the requirements of our business and the expectations of our shareholders. Through that lens, we undertook a reorganization in fiscal 2020 and made the decision to exit from some underperforming businesses. This allowed us to redirect capital into businesses and opportunities that will deliver a better return for our invested capital, and for the hard work of our employees and the confidence of our investors.
We made three strategic acquisitions in fiscal 2020:
- MARCO, a U.K.-based provider of yield control and recipe formulation systems for customers in the food, nutraceuticals and cosmetic sectors. MARCO is an initial step into a product-based niche segment of the food sector with a dependable growth rate. As a strictly regulated sector with steady demand for high-precision technologies, the food industry is perfectly aligned with our strengths and growth strategy;
- iXLOG, an IT consulting and service provider based in Germany that specializes in analytics, business intelligence and business process optimization; and
- Industrial Automation Partners B.V. (IAP), a Netherlands-based provider of process automation services.
Together, iXLOG and IAP will help expand the capabilities of our ATS Process Automation business.
Along with acquisitions, we made significant investments in capacity building this year. We expanded existing operations, including facilities in Cambridge, Chicago and Europe; this includes our new Cambridge-based Innovation Centre, which will be part of ATS Life Sciences. These investments also include training for our people in the ATS Business Model and role-specific skills. Expanding capacity in high-performing areas of our business and enhancing our capabilities will help us meet the evolving needs of our customers and deliver value for our shareholders.
As part of our growth strategy, we continually look at how we deploy capital to confirm that it is generating the results needed.
ATS Business Model
Around ATS, you’ll hear us describe the ATS Business Model (ABM) as “our playbook” – the collection of tools and approaches that drives continuous improvement and guides us in achieving our business goals. But it’s more than that. Now in its third year, the ABM is the foundation of our culture and the common language that is essential to building a global leader. It unites our businesses and provides a common playbook for our decentralized company to deliver value for our employees, customers and shareholders.
In fiscal 2020, we held our second annual President’s Kaizen Event, where our executive leadership team take an active role on Kaizen teams throughout the business. The enthusiastic participation shows the organization our commitment to the ABM and the improvements it delivers. It also highlights the talent and depth of our leadership team, which I believe is one of our company’s greatest long-term strengths.
The Kaizen process empowers our people to develop solutions that continue to deliver improvements in efficiency, productivity and quality, delivering greater value to our customers and shareholders.
At the same time, the core value of our ABM is that its impact comes from the shop floor and the front line. The Kaizen process empowers our people to develop solutions that continue to deliver improvements in efficiency, productivity and quality, delivering greater value to our customers and shareholders.
As you’ll read in a following section (Driving Purpose with the ATS Business Model), we also held our first ABM event with Comecer. That event, and Kaizens in locations across our operations, highlight the vital role the ABM plays in uniting our organization. It remains our most powerful tool for getting the most from our people.
With the ABM thoroughly embedded in our approach to operations, it is now expanding to include strategy, product innovation and commercial excellence. We are beginning to see how the principles of “common sense, rigorously applied” – process orientation, problem definition, leveraging data and setting clear performance metrics – are refining the way we deploy marketing initiatives, set sales targets and approach customers. We are in the early stage of an evolution that will deliver lasting value to our clients and our shareholders.
In October 2019, ATS Life Sciences and Comecer received a $32 million Order Booking from a leading global pharmaceutical company to supply an automated pharmaceutical assembly and filling line. Operating separately, neither business could have won this contract; working jointly they did, while pointing the way to future successes for ATS. By working together, by leveraging the talents and capacity available across our organization, ATS can achieve remarkable things.
A case in point is the adaptability and flexibility we’ve been able to show in redesigning and repurposing systems and facilities to help meet the COVID-19 challenge. As we move into a post-pandemic world, I believe that supply chains are going to be different. Governments and businesses will move to reduce the risks associated with being dependent on a single source for essential goods. Such an environment positions ATS to help companies rethink and realign their supply chains and manufacturing capabilities.
Our growing strength in sectors such as life sciences, pharmaceuticals, electric vehicles and the Industrial Internet of Things all point to ATS’ outstanding capacity to meet the demands and the realities of the future. Across ATS, our people, process and performance will continue to align, so we can work with purpose and create sustainable value for our shareholders and our customers.
Chief Executive Officer