ATS REPORTS SECOND QUARTER FISCAL 2023 RESULTS

CAMBRIDGE, ON, Nov. 9, 2022 /CNW/ - ATS Automation Tooling Systems Inc. (TSX: ATA) ("ATS" or the "Company") today reported its financial results for the three and six months ended October 2, 2022.

Second quarter highlights:

• Revenues increased 12.8% year over year to $588.9 million.
• Net Income was $29.5 million compared to $29.6 million a year ago.
• Basic earnings per share were 32 cents, no change year over year.
• Adjusted basic earnings per share1  were 50 cents, compared to 53 cents a year ago.
• Order Bookings1  were $804 million, 57.6% higher compared to $510 million a year ago.
• Order Backlog1 increased 38.5% to $1,793 million at October 2, 2022 compared to $1,295 million a year ago.
• Subsequent to the second quarter, the Company amended its $750 million senior secured credit facility to extend the agreement to November 4, 2026 and to add a fully drawn $300 million non-amortizing secured term credit facility maturing November 4, 2024.

"Second quarter performance reflected the benefits of our diversified presence in strategic markets where ATS achieved record Order Bookings and Order Backlog, along with solid revenues and earnings from operations in a challenging economic environment," said Andrew Hider, Chief Executive Officer. "We also continued to integrate new operations according to plan and utilized our ATS Business Model to address the current realities affecting global supply chains. We remain confident in our ability to drive profitable growth and deliver on our commitments."

Year-to-date highlights:

• Revenues increased 16.2% year over year to $1,199.5 million.
• Net Income increased 18.4% year over year to $68.9 million.
• Basic earnings per share increased 19.0% year over year to 75 cents.
• Adjusted basic earnings per share1  increased 12.9% year over year to $1.14.

• Order Bookings1  were $1,539 million, compared to $1,146 million a year ago.

Mr. Hider added: "Across life sciences, and in electric vehicle battery assembly, as well as food, beverage and sophisticated forms of clean energy production, our key technologies and integrated solutions including after- market services continue to open doors with new and existing customers. Our record $1.8 billion of Order Backlog positions us well for the future, and we will continue to drive forward in a disciplined manner using our ABM."

1 Non-IFRS measure: see "Notice to Reader: Non-IFRS Measures and Additional IFRS Measures".

Financial results
(In millions of dollars, except per share and margin data)

Three Months Ended October 2, 2022		Three Months Ended September 26, 2021	Variance	Six Months Ended October 2, 2022	Six Months Ended September 26, 2021	Variance
Revenues	$        588.9	$        522.1	12.8 %	$     1,199.5	$     1,032.7	16.2 %
Net income	$          29.5	$          29.6	(0.3) %	$          68.9	$          58.2	18.4 %
Adjusted earnings from operations1	$          75.1	$          70.7	6.2 %	$        162.6	$        136.1	19.5 %
Adjusted earnings from operations margin1	12.8 %	13.5 %	(79)bps	13.6 %	13.2 %	38bps
Adjusted EBITDA1	$          88.8	$         83.3	6.6 %	$        189.6	$       161.2	17.6 %
Adjusted EBITDA margin1	15.1 %	16.0 %	(88)bps	15.8 %	15.6 %	20bps
Basic earnings per share	$          0.32	$         0.32	— %	$          0.75	$         0.63	19.0 %
Adjusted basic earnings per share1	$          0.50	$         0.53	(5.7) %	$          1.14	$         1.01	12.9 %
Order Bookings1	$        804.0	$       510.0	57.6 %	$     1,539.0	$     1,146.0	34.3 %
As At				October 2 2022	September 26 2021	Variance
Order Backlog1				$       1,793	$       1,295	38.5 %

¹ Non-IFRS Financial Measure - See "Non-IFRS and Other Financial Measures."

Second quarter summary
Fiscal 2023 second quarter revenues were 12.8% or $66.8 million higher than in the corresponding period a year ago despite foreign exchange translation which negatively impacted revenues earned organically by $21.5 million or 4.1%, primarily reflecting the strengthening of the Canadian dollar relative to the Euro. Growth reflected $68.6 million of revenues earned by acquired companies ("acquired companies" refers to companies that were not part of the consolidated group in the comparable prior year periods), most notably $58.6 million from SP which was acquired in the third quarter of fiscal 2022 and year-over-year organic revenue growth (growth excluding contributions from acquired companies and foreign exchange translation), of $19.7 million, or 3.8%. Revenues generated from construction contracts increased 10.9% or $35.7 million due to a combination of revenues earned by acquired companies of $15.5 million, primarily SP and NCC, and organic revenue growth. Revenues from services increased 3.1% or $3.5 million primarily due to revenues earned by acquired companies. Revenues from the sale of goods increased 33.5% or $27.6 million due to revenues earned by acquired companies, primarily SP, which generates a higher percentage of its revenues from product sales.

By market, revenues generated in life sciences increased $24.6 million or 9.5% year over year. This was the  result of revenues earned by acquisitions totalling $61.9 million, primarily SP, partially offset by reductions due to project timing and $11.0 million of foreign exchange translation impact. Revenues generated in food & beverage decreased $24.2 million or 24.4% due to supply chain delays impacting the timing of project performance, coupled with $8.8 million of foreign exchange translation impact. Revenues in transportation increased $51.6 million or 74.8% on higher Order Backlog entering the second quarter of fiscal 2023, driven partially by a previously announced U.S. $70 million EV booking. Revenues generated in consumer products increased $12.7 million or 19.7% on higher Order Backlog entering the second quarter of fiscal 2023. Revenues in energy increased $2.1 million or 7.1% due to higher Order Backlog entering the second quarter of fiscal 2023.

Revenues for the six months ended October 2, 2022 were 16.2% or $166.8 million higher than in the corresponding period a year ago and included $155.9 million of revenues earned by acquired companies, most notably $118.0 million from SP.  Organic revenue growth, excluding contributions from acquired companies and  the impact of foreign exchange fluctuations, was $47.4 million or 4.6% higher than the corresponding period in the prior year. Organic revenue growth was primarily related to activity in transportation, driven by work in EV, as well as increases in consumer products. Foreign exchange translation negatively impacted revenues by $36.5   million

or 3.5%, primarily reflecting the strengthening of the Canadian dollar relative to the Euro. Revenues generated from construction contracts increased 10.1% or $67.8 million due to revenues earned by acquired companies totalling $36.4 million (primarily $18.9 million from SP), combined with organic revenue growth. Revenues from services increased 8.0% or $17.1 million due to a combination of revenues earned by acquired companies of

$22.8 million and organic revenue growth, partially offset by foreign exchange impact of $14.0 million. Revenues from the sale of goods increased 54.8% or $81.9 million due to $96.8 million of product and spare parts sales earned by acquired companies, primarily SP, which generate a higher percentage of its revenues from product sales, partially offset by supply chain delays impacting the timing of project performance and foreign exchange translation impact of $7.2 million.

By market, fiscal 2023 year-to-date revenues from life sciences increased $91.0 million or 18.6% due to contributions from acquired companies of $138.8 million, partially offset by lower Order Bookings and foreign exchange translation of $17.4 million. Revenues generated in food & beverage decreased $29.4 million or 13.8% due to a combination of supply chain delays impacting the timing of project performance and foreign exchange translation impact of $17.4 million. Revenues in transportation increased $73.4 million or 50.9% due to higher Order Backlog entering the year, revenues earned on a previously announced large EV booking and the timing of project performance. Revenues generated in consumer products increased $26.9 million or 21.3% on contributions from acquired companies of $8.4 million and higher Order Backlog entering the fiscal year. Revenues in energy increased $4.9 million or 8.3% due to higher Order Backlog entering the year and the timing of project performance.

Net Income. Net income for the second quarter of fiscal 2023 was $29.5 million (32 cents per share basic and diluted), compared to $29.6 million (32 cents per share basic and diluted) for the second quarter of fiscal 2022. The increased revenues and decreased stock-based compensation were offset by lower gross margins and increased SG&A costs. Adjusted basic earnings per share were 50 cents compared to 53 cents in the second quarter of fiscal 2022 (see "Reconciliation of Non-IFRS Measures to IFRS Measures").

Net income for the six months ended October 2, 2022 was $68.9 million (75 cents per share basic and diluted),  a

$10.7 million (or 18.4%) increase compared to $58.2 million (63 cents per share basic and diluted) for the corresponding period a year ago. The increase was primarily the result of higher revenues and decreased stock- based compensation expense, partially offset by increases in SG&A and finance costs. Adjusted basic earnings per share were $1.14 in the six months ended October 2, 2022 compared to $1.01 in the corresponding period a year ago (see "Reconciliation of Non-IFRS Measures to IFRS Measures").

Depreciation and amortization expense was $30.1 million in the second quarter of fiscal 2023, compared to $27.8 million a year ago. The increase was primarily due to the addition of identifiable intangible assets recorded on the acquisition of SP.

EBITDA was $83.1 million (14.1% EBITDA margin) in the second quarter of fiscal 2023 compared to $71.5 million (13.7% EBITDA margin) in the second quarter of fiscal 2022. EBITDA for the second quarter of fiscal 2023 included $1.3 million of restructuring charges, $0.5 million of incremental costs related to the Company's acquisition activity, and $3.9 million of acquisition-related inventory fair value charges. EBITDA for the corresponding period in the prior year included $2.1 million of incremental costs related to the Company's acquisition activity, and $9.7 million of acquisition-related inventory fair value changes. Excluding these costs, adjusted EBITDA was $88.8 million (15.1% adjusted EBITDA margin), compared to $83.3 million (16.0% adjusted EBITDA margin) a year ago. Lower adjusted EBITDA margin reflected decreased stock-based compensation costs and increased revenues coupled with lower gross margins due to a combination of issues in supply chain lead time, cost increases and a change in project mix. EBITDA margin is a non-IFRS ratio - see "Non-IFRS and Other Financial Measures."

Depreciation and amortization expense was $63.7 million for the first six months of fiscal 2023, compared to $53.1 million for the corresponding period a year ago, primarily due to the addition of identifiable intangible assets recorded on the acquisition of SP.

EBITDA was $178.3 million (14.9% EBITDA margin) in the first six months of fiscal 2023 compared to $141.6 million (13.7% EBITDA margin) in the corresponding period a year ago. EBITDA for the first six months of fiscal 2023 included $0.9 million of incremental costs related to the Company's acquisition activity, $1.3 million of restructuring charges and $9.1 million of acquisition-related inventory fair value charges, compared to the corresponding period in the prior year which included $4.2 million of incremental costs related to the Company's acquisition activity, and $15.4 million of acquisition-related inventory fair value charges. Excluding these costs, adjusted EBITDA was $189.6 million (15.8% adjusted EBITDA margin), compared to $161.2 million (15.6% adjusted EBITDA margin) a year ago. Higher adjusted EBITDA margin reflected increased revenues and decreased stock-based compensation expense, partially offset by lower gross margins due to a combination of issues in supply chain lead time, cost increases and a change in project mix.

Order Backlog Continuity
(In millions of dollars)
	Three Months	Three Months Ended	Six Months	Six Months Ended
	Ended October 2, 2022	September 26, 2021	Ended October 2, 2022	September 26, 2021
Opening Order Backlog	$              1,555	$              1,248	$              1,438	$              1,160
Revenues	(589)	(522)	(1,200)	(1,033)
Order Bookings	804	510	1,539	1,146
Order Backlog adjustments1	23	59	16	22
Total	$              1,793	$              1,295	$              1,793	$              1,295

¹ Order Backlog adjustments include incremental Order Backlog of acquired companies ($nil for the six-months ended October 2, 2022, $13 million acquired with NCC Automated Systems, Inc. ("NCC") and $24 million acquired with BioDot, Inc. ("BioDot") in the six-months ended September 26, 2021), foreign exchange adjustments, scope changes and cancellations.

Order Bookings
Second quarter fiscal 2023 Order Bookings were $804 million. The 57.6% year-over-year increase reflected organic growth of 49.4% and 11.9% growth from acquired companies, partially offset by a 3.7% decrease due to foreign exchange rate translation of Order Bookings from foreign-based ATS subsidiaries, primarily reflecting the strengthening of the Canadian dollar relative to the Euro. Order Bookings from acquired companies totalled $60.6 million, of which SP Industries, Inc. ("SP") contributed $44.1 million. By market, Order Bookings in life sciences increased compared to the prior-year period, primarily due to $46.2 million of Order Bookings generated by acquired companies, of which SP contributed $44.1 million. Order Bookings in food & beverage decreased due to the timing of projects. Order Bookings in transportation increased due to a U.S. $167 million Order Booking from an existing global automotive customer to move towards fully automated battery assembly systems for their North American manufacturing operations. This Order Booking is expected to be executed over the next 14 months and is in addition to the U.S. $70 million Order Booking from the same customer in the first quarter. Subsequent to the end of the second fiscal quarter, the Company announced it has received Order Bookings of U.S. $140 million for the continued capacity expansion of automated battery module and pack assembly systems in North America as part of the same enterprise program. Order Bookings in consumer products increased due to contributions from acquisitions of $3.7 million, primarily from NCC. Order Bookings in energy decreased due to timing of customer projects.

Trailing twelve month book-to-bill ratio at October 2, 2022 was 1.21:1. Book-to-bill ratio is a supplementary financial measure - see "Non-IFRS and Other Financial Measures."

Backlog
At October 2, 2022, Order Backlog was $1,793 million, 38.5% higher than at September 26, 2021. Order Backlog growth was primarily driven by higher Order Bookings in fiscal 2023 within the transportation market, primarily from EV Order Bookings, and Order Backlog from acquired companies.

Outlook
By market, the life sciences funnel remains strong as a result of solid activity in medical devices, pharmaceuticals and radiopharmaceuticals. Management is seeing opportunities with both new and existing customers as a result of key technologies and integrated solutions offerings. Funnel activity in food & beverage remains strong as customers shift production to reduce dependency on gas-powered equipment in favour of electrification. In addition, the food & beverage funnel is benefiting from the Company's strong brand recognition within tomato processing. In transportation, the funnel largely includes strategic opportunities related to electric vehicles, as the global automotive industry continues to pivot production away from internal combustion engines and seeks suppliers like ATS that have proven EV battery assembly capabilities. Funnel activity in energy is stable and includes some longer-term opportunities. Funnel activity in consumer products remains stable as well. Overall, while some customers are exercising normal caution in their approach to investment and spending, management has not observed a change in customer behaviour across the business in this regard. Funnel growth in markets where environmental, social and governance ("ESG") requirements are an increasing focus for customers — including grid battery storage, EV and nuclear, as well as consumer goods packaging — provide ATS with opportunities to use its capabilities to respond to customer sustainability standards and goals. Customers seeking to de-risk or enhance the resiliency of their supply chains, address a shortage of skilled workers or combat high labour costs also provide future opportunities for ATS to pursue.

Order Backlog of $1,793 million is expected to help mitigate some of the impact of quarterly variability in Order Bookings on revenues in the short term. The Company's Order Backlog includes several large enterprise programs that have longer periods of performance and therefore longer revenue recognition cycles, including several in the early stages of execution. This has extended the average period over which the Company expects to convert its Order Backlog to revenues, providing the Company with longer visibility. As a result of this, the Company's Order Backlog conversion rate has decreased. In the third quarter of fiscal 2023, management expects the conversion of Order Backlog to revenues to be in the 32% to 37% range. This estimate is calculated each quarter based on management's assessment of project schedules across all customer contracts, expectations for quick-turn product and services revenues, expected delivery timing of third-party equipment and operational capacity.

The timing of customer decisions on larger opportunities is expected to cause variability in Order Bookings from quarter to quarter. Revenue in a given period is dependent on a combination of the volume of outstanding projects the Company is contracted to, the size and duration of those projects, and the timing of project activities including design, assembly, testing, and installation. Given the specialized nature of the Company's offerings, the size and scope of projects vary based on customer needs. The Company seeks to achieve revenue growth organically and by identifying strategic acquisition opportunities that provide access to attractive end-markets and new products and technologies. The Company is working to grow its product portfolio and after-sales service revenues as a percentage of overall revenues over time, which is expected to provide some balance to the capital expenditure cycle of the Company's customers.

Management is pursuing several initiatives to grow its revenues and improve its profitability with the goal of expanding its adjusted earnings from operations margin to 15% over the long term. These initiatives include growing the Company's after-sales service business, improving global supply chain management, increasing the use of standardized platforms and technologies, growing revenues while leveraging the Company's cost structure, and pursuing continuous improvement in all business activities through the ABM. The Company continues to make progress in line with its plans to integrate acquired companies over the last year, and expects to realize cost and revenue synergies consistent with announced integration plans.

In the short term, the Company must continue to address disruptions to global supply chains, which are leading to longer lead times and cost increases on certain raw materials and components used by the Company. To date,  the Company has mitigated many of these supply chain disruptions through the use of alternative supply sources and savings on materials not affected by cost increases. Further cost increases or prolonged disruptions could impact the timing and progress of the Company's margin expansion efforts and the timing of revenue recognition. Maintaining the margin target assumes that the Company will successfully implement its initiatives, and that such initiatives will result in improvements to its adjusted earnings from operations margin that offset the pressures

resulting from disruptions in the global supply chain (see "Forward-Looking Statements" for a description of the risks underlying the achievement of the margin target in future periods).

With the ongoing recessionary and energy risks in Europe, in addition to other macroeconomic concerns, the Company continues to monitor its exposure to European customers. The Company's European divisions have a strong global presence, healthy funnels, and diversified revenue streams, with current Order Backlog in Europe representing 27.3% of total Order Backlog. The Company regularly monitors customers for changes in credit risk. The Company does not believe that any single industry or geographic region represents significant credit risk.

In the short term, the Company expects non-cash working capital to remain above 10%, as programs progress through milestones. Over the long term, the Company generally expects to continue investing in non-cash working capital to support the growth of its business, with fluctuations expected on a quarter-over-quarter basis. The Company's long-term goal is to maintain its investment in non-cash working capital as a percentage of annualized revenues below 15%. The Company expects that continued cash flows from operations, together with cash and cash equivalents on hand and credit available under operating and long-term credit facilities will be sufficient to fund its requirements for investments in non-cash working capital and capital assets, and to fund strategic investment plans including some potential acquisitions. Acquisitions could result in additional debt or equity financing requirements for the Company. Non-cash working capital as a percentage of revenues is a Non-IFRS ratio - see "Non-IFRS and Other Financial Measures."

Reorganization Activity
The Company regularly undertakes reviews of its operations to ensure alignment with market opportunities and to achieve optimal structural and cost efficiencies. As a part of this review, the Company identified an opportunity to improve the cost structure of the organization through targeted reductions which will primarily impact certain management positions. These actions started in the second quarter of fiscal 2023 and will continue during the third and fourth quarters of fiscal 2023. The estimated cost of these activities is between $20.0 million and $25.0 million, with a payback period of approximately 18 months.

Quarterly Conference Call
ATS will host a conference call and webcast at 8:30 a.m. eastern on Wednesday, November 9, 2022 to discuss its quarterly results. The listen-only webcast can be accessed live at www.atsautomation.com. The conference call can be accessed live by dialing [phone] five minutes prior. A replay of the conference will be available on the ATS website following the call. Alternatively, a telephone recording of the call will be available for one week (until midnight November 16, 2022) by dialing [phone] and entering passcode 906061 followed by the number sign.

About ATS

ATS is an industry-leading automation solutions provider to many of the world's most successful companies. ATS uses its extensive knowledge base and global capabilities in custom automation, repeat automation, automation products and value-added solutions including pre-automation and after-sales services to address the  sophisticated manufacturing automation systems and service needs of multinational customers in markets such  as life sciences, food & beverage, transportation, consumer products and energy. Founded in 1978, ATS employs over 6,000 people at more than 50 manufacturing facilities and over 75 offices in North America, Europe, Southeast Asia and China. Visit us at www.atsautomation.com.

Consolidated Revenues
(In millions of dollars)
	Three Months	Three Months Ended	Six Months	Six Months Ended
Revenues by type	Ended October 2, 2022	September 26, 2021	Ended October 2, 2022	September 26, 2021
Revenues from construction contracts	$              362.4	$              326.7	$              737.5	$              669.7
Services rendered	116.5	113.0	230.6	213.5
Sale of goods	110.0	82.4	231.4	149.5
Total revenues	$              588.9	$              522.1	$           1,199.5	$           1,032.7
	Three Months	Three Months Ended	Six Months Ended	Six Months Ended
Revenues by market	Ended October 2, 2022	September 26, 2021	October 2, 2022*	September 26, 2021
Life Sciences	$              284.2	$              259.6	$              581.2	$              490.2
Transportation	120.6	69.0	217.5	144.1
Food & Beverage	75.0	99.2	183.8	213.2
Consumer Products	77.3	64.6	153.0	126.1
Energy	31.8	29.7	64.0	59.1
Total revenues	$              588.9	$              522.1	$           1,199.5	$           1,032.7

* $18.5 million of revenues earned by SP in the three months ended July 3, 2022 have been reclassified from Consumer Products to Life Sciences and reflected in the revenues for the six months ended October 2, 2022 above.

Consolidated Operating Results
(In millions of dollars)
	Three Months	Three Months Ended	Six Months	Six Months Ended
	Ended October 2, 2022	September 26, 2021	Ended October 2, 2022	September 26, 2021
Earnings from operations	$                53.0	$                43.7	$              114.6	$                88.5
Amortization of acquisition-related intangible assets	16.4	15.2	36.7	28.0
Acquisition-related transaction costs	0.5	2.1	0.9	4.2
Acquisition-related inventory fair value charges	3.9	9.7	9.1	15.4
Restructuring charges	1.3	—	1.3	—
Adjusted earnings from operations1	$                75.1	$                70.7	$              162.6	$              136.1

¹ Non-IFRS Financial Measure, See "Non-IFRS and Other Financial Measures"

	Three Months Ended	Three Months Ended September 26,	Six Months Ended	Six Months Ended September 26,
	October 2, 2022	2021	October 2, 2022	2021
Earnings from operations	$                53.0	$                43.7	$              114.6	$                88.5
Depreciation and amortization	30.1	27.8	63.7	53.1
EBITDA1	$                83.1	$                71.5	$              178.3	$              141.6
Restructuring charges	1.3	—	1.3	—
Acquisition-related transaction costs	0.5	2.1	0.9	4.2
Acquisition-related inventory fair value charges	3.9	9.7	9.1	15.4
Adjusted EBITDA1	$                88.8	$                83.3	$              189.6	$              161.2

¹ Non-IFRS Financial Measure, See "Non-IFRS and Other Financial Measures"

Order Backlog by Market (In millions of dollars)		September 26,
As at	October 2, 2022	2021
Life Sciences	$                 782	$                 778
Food & Beverage	162	143
Transportation	614	190
Consumer Products	167	96
Energy	68	88
Total	$              1,793	$              1,295
1 The increase in transportation Order Backlog was primarily driven by EV Order Bookings.

Reconciliation of Non-IFRS Measures to IFRS Measures
(In millions of dollars, except per share data)

The following table reconciles adjusted EBITDA and EBITDA to the most directly comparable IFRS measure (net income):

	Three Months Ended	Three Months Ended September 26,	Six Months Ended	Six Months Ended September 26,
	October 2, 2022	2021	October 2, 2022	2021
Adjusted EBITDA	$                88.8	$               83.3	$              189.6	$              161.2
Less: restructuring charges	1.3	—	1.3	—
Less: acquisition-related transaction costs	0.5	2.1	0.9	4.2
Less: acquisition-related inventory fair value charges	3.9	9.7	9.1	15.4
EBITDA	$                83.1	$               71.5	$              178.3	$              141.6
Less: depreciation and amortization expense	30.1	27.8	63.7	53.1
Earnings from operations	$                53.0	$               43.7	$              114.6	$               88.5
Less: net finance costs	13.4	7.2	24.2	14.7
Less: provision for income taxes	10.1	6.9	21.5	15.6
Net income	$                29.5	$               29.6	$                68.9	$               58.2

The following tables reconcile adjusted earnings from operations and adjusted basic earnings per share to the most directly comparable IFRS measure (net income and basic earnings per share):

Three Months Ended October 2, 2022						Three Months Ended September 26, 2021
Earnings from Operations		Finance Costs	Provision for Income Taxes	Net Income	Basic EPS	Earnings from Operations	Finance Costs	Provision for Income Taxes	Net Income	Basic EPS
Reported (IFRS)	$          53.0	$         (13.4)	$         (10.1)	$      29.5	$   0.32	$          43.7	$           (7.2)	$           (6.9)	$      29.6	$   0.32
Amortization of acquisition-	16.4	—	—	16.4	0.18	15.2	—	—	15.2	0.16
related intangibles
Restructuring charges	1.3	—	—	1.3	0.01	—	—	—	—	—
Acquisition-related inventory	3.9	—	—	3.9	0.04	9.7	—	—	9.7	0.10
fair value charges
Acquisition-related	0.5	—	—	0.5	0.01	2.1	—	—	2.1	0.02
transaction costs
Tax effect adjustments1	—	—	(5.6)	(5.6)	(0.06)	—	—	(6.9)	(6.9)	(0.07)
Adjusted (non-IFRS)	$          75.1			$      46.0	$   0.50	$          70.7			$      49.7	$   0.53

¹ Adjustments to provision for income taxes relate to the income tax effects of adjustment items that are excluded for the purposes of calculating non-IFRS based adjusted net income.

Six Months Ended October 2, 2022						Six Months Ended September 26, 2021
Earnings from Operations		Finance Costs	Provision for Income Taxes	Net Income	Basic EPS	Earnings from Operations	Finance Costs	Provision for Income Taxes	Net Income	Basic EPS
Reported (IFRS) Amortization of acquisition- related intangibles Restructuring charges Acquisition-related fair value inventory charges Acquisition-related transaction costs Tax effect of the above adjustments1	$        114.6 36.7 1.3 9.1 0.9 —	$         (24.2) — — — — —	$         (21.5) — — — — (11.9)	$      68.9 36.7 1.3 9.1 0.9 (11.9)	$   0.75 0.40 0.01 0.10 0.01 (0.13)	$          88.5	$         (14.7)	$         (15.6)	$      58.2	$   0.63
						28.0	—	—	28.0	0.30
						—	—	—	—	—
						15.4	—	—	15.4	0.16
						4.2	—	—	4.2	0.05
						—	—	(12.3)	(12.3)	(0.13)
Adjusted (non-IFRS)	$        162.6			$    105.0	$   1.14	$        136.1			$      93.5	$   1.01

¹ Adjustments to provision for income taxes relate to the income tax effects of adjustment items that are excluded for the purposes of calculating non-IFRS based adjusted net income.

The following table reconciles organic revenue to the most directly comparable IFRS measure (revenue):

	Three Months Ended October 2, 2022	Three Months Ended September 26, 2021	Six Months Ended October 2, 2022	Six Months Ended September 26, 2021
Organic revenue	$              541.8	$              415.4	$           1,080.1	$              831.2
Revenues of acquired companies	68.6	120.4	155.9	234.8
Impact of foreign exchange rate changes	(21.5)	(13.7)	(36.5)	(33.3)
Total revenue	$              588.9	$              522.1	$           1,199.5	$           1,032.7
Organic revenue growth	3.8 %		4.6 %

The following table reconciles non-cash working capital as a percentage of revenues to the most directly comparable IFRS measures:

	October 2  2022	March 31 2022
As at
Accounts receivable	$              373.8	$              348.6
Income tax receivable	6.8	9.0
Contract assets	548.7	360.8
Inventories	236.5	207.9
Deposits, prepaids and other assets	88.9	84.8
Accounts payable and accrued liabilities	(516.3)	(501.5)
Income tax payable	(39.2)	(48.6)
Contract liabilities	(294.0)	(248.3)
Provisions	(17.9)	(24.8)
Non-cash working capital	$              387.3	$              187.9
Trailing six-month revenues annualized	$           2,399.0	$           2,300.0
Working capital %	16.1 %	8.2 %

The following table reconciles net debt to adjusted EBITDA to the most directly comparable IFRS measures:

	October 2 2022	March 31 2022
As at
Cash and cash equivalents	$               95.2	$           135.3
Bank indebtedness	(17.9)	(1.8)
Current portion of lease liabilities	(19.9)	(20.0)
Current portion of long-term debt	(0.0)	(0.0)
Long-term lease liabilities	(55.8)	(62.9)
Long-term debt	(1,174.7)	(1,016.7)
Net Debt	$         (1,173.1)	$            (966.1)
Adjusted EBITDA (TTM)	$             372.2	$             343.9
Net Debt to Adjusted EBITDA	3.2x	2.8x

The following table reconciles free cash flow to the most directly comparable IFRS measures:

(in millions of dollars)	Three Months Ended October 2, 2022	Three Months Ended September 26, 2021	Six Months Ended October 2, 2022	Six Months Ended September 26, 2021
Cash flows provided by (used in) operating activities	$               (38.0)	$                55.7	$               (69.8)	$              104.1
Acquisition of property, plant and equipment	(6.6)	(8.8)	(14.1)	(19.8)
Acquisition of intangible assets	(2.4)	(2.5)	(7.2)	(5.8)
Free cash flow	$               (47.0)	$                44.4	$               (91.1)	$                78.5

INVESTMENTS, LIQUIDITY, CASH FLOW AND FINANCIAL RESOURCES
(In millions of dollars, except ratios)
As at	October 2, 2022	March 31, 2022
Cash and cash equivalents	$                95.2	$              135.3
Debt-to-equity ratio1	1.26:1	1.14:1

¹ Debt is calculated as bank indebtedness, long-term debt and lease liabilities. Equity is calculated as total equity less accumulated other comprehensive income.

	Three Months Ended October 2, 2022	Three Months Ended September 26, 2021	Six Months Ended October 2, 2022	Six Months Ended September 26, 2021
Cash, beginning of period	$              139.9	$              216.4	$              135.3	$              187.5
Total cash provided by (used in): Operating activities	(38.0)	55.7	(69.8)	104.1
Investing activities	(8.8)	(62.7)	1.0	(191.6)
Financing activities	2.0	(30.3)	30.0	79.2
Net foreign exchange difference	0.1	2.2	(1.3)	2.1
Cash, end of period	$                95.2	$              181.3	$                95.2	$              181.3

 

ATS AUTOMATION TOOLING SYSTEMS INC.
Interim Condensed Consolidated Statements of Financial Position
(in thousands of Canadian dollars - unaudited)

	October 2	March 31
As at	2022	2022
ASSETS
Current assets
Cash and cash equivalents	$        95,163	$      135,282
Accounts receivable	373,753	348,631
Income tax receivable	6,831	9,038
Contract assets	548,659	360,820
Inventories	236,500	207,873
Deposits, prepaids and other assets	88,945	84,818
	1,349,851	1,146,462
Non-current assets
Property, plant and equipment	227,596	222,123
Right-of-use assets	74,606	81,289
Other assets	25,828	18,631
Goodwill	1,049,803	1,024,790
Intangible assets	556,674	568,180
Deferred income tax assets	6,081	7,922
	1,940,588	1,922,935
Total assets	$   3,290,439	$   3,069,397
LIABILITIES AND EQUITY
Current liabilities
Bank indebtedness	$        17,947	$          1,766
Accounts payable and accrued liabilities	516,332	501,465
Income tax payable	39,230	48,617
Contract liabilities	294,049	248,329
Provisions	17,888	24,825
Current portion of lease liabilities	19,856	19,964
Current portion of long-term debt	43	43
	905,345	845,009
Non-current liabilities
Employee benefits	28,545	29,132
Long-term lease liabilities	55,813	62,856
Long-term debt	1,174,707	1,016,668
Deferred income tax liabilities	118,704	126,114
Other long-term liabilities	—	3,935
	1,377,769	1,238,705
Total liabilities	$   2,283,114	$   2,083,714
EQUITY
Share capital	$      517,529	$      530,241
Contributed surplus	13,437	11,734
Accumulated other comprehensive income	4,541	22,848
Retained earnings	468,340	416,773
Equity attributable to shareholders	1,003,847	981,596
Non-controlling interests	3,478	4,087
Total equity	1,007,325	985,683
Total liabilities and equity	$   3,290,439	$   3,069,397

Please refer to complete Interim Condensed Consolidated Financial Statements for supplemental notes which can be found on the Company's profile on SEDAR at www.sedar.com and on the Company's website at www.atsautomation.com.

 

ATS AUTOMATION TOOLING SYSTEMS INC.
Interim Condensed Consolidated Statements of Income
(in thousands of Canadian dollars, except per share amounts - unaudited)

	Three months ended		Six months ended
October 2 2022		September 26           October 2 2021*                  2022*		September 26 2021*
Revenues Revenues from construction contracts Services rendered Sale of goods	$        362,421 116,532 110,001	$        326,715 113,050 82,369	$        737,497 230,629 231,419	$        669,722 213,536 149,491
Total revenues	588,954	522,134	1,199,545	1,032,749
Operating costs and expenses
Cost of revenues	427,476	379,085	868,329	751,385
Selling, general and administrative	101,849	88,888	214,021	173,524
Restructuring costs	1,271	—	1,271	—
Stock-based compensation	5,307	10,507	1,320	19,280
Earnings from operations	53,051	43,654	114,604	88,560
Net finance costs	13,442	7,177	24,167	14,682
Income before income taxes	39,609	36,477	90,437	73,878
Income tax expense	10,079	6,933	21,514	15,651
Net income	$          29,530	$            29,544	$          68,923	$          58,227
Attributable to
Shareholders	$          29,506	$            29,284	$          68,710	$          57,423
Non-controlling interests	24	260	213	804
$          29,530		$            29,544	$          68,923	$          58,227
Earnings per share attributable to shareholders Basic and diluted	$              0.32	$               0.32	$              0.75	$              0.63

* Certain amounts for the previously reported six months ended September 26, 2021 were re-presented in fiscal 2022 as a result of measurement period adjustments for the acquisitions of CFT and BioDot as required by IFRS 3, Business Combinations.

Please refer to complete Interim Condensed Consolidated Financial Statements for supplemental notes which can be found on the Company's profile on SEDAR at www.sedar.com and on the Company's website at www.atsautomation.com.

 

ATS AUTOMATION TOOLING SYSTEMS INC.
Interim Condensed Consolidated Statements of Cash Flows
(in thousands of Canadian dollars - unaudited)

	Three months ended		Six months ended
	October 2 2022	September 26 2021*	October 2 2022	September 26 2021*
Operating activities
Net income	$          29,530	$          29,544	$          68,923	$          58,227
Items not involving cash
Depreciation of property, plant and equipment	6,032	4,987	12,099	10,046
Amortization of right-of-use assets	5,669	5,574	11,401	10,850
Amortization of intangible assets	18,361	17,301	40,192	32,215
Deferred income taxes	(7,225)	(8,834)	(14,225)	(13,811)
Other items not involving cash	2,593	(1,002)	8,547	4,460
Stock-based compensation	1,434	372	2,129	655
Change in non-cash operating working capital	(94,412)	7,724	(198,820)	1,437
Cash flows provided by (used in) operating activities	$         (38,018)	$          55,666	$         (69,754)	$        104,079
Investing activities
Acquisition of property, plant and equipment	$           (6,640)	$           (8,826)	$         (14,135)	$         (19,824)
Acquisition of intangible assets	(2,387)	(2,537)	(7,241)	(5,809)
Business acquisition, net of cash acquired	—	(51,392)	—	(166,185)
Settlement of cross-currency interest rate swap
instrument	—	—	21,493	—
Proceeds from disposal of property, plant and equipment	229	101	906	195
Cash flows provided by (used in) investing activities	$           (8,798)	$         (62,654)	$            1,023	$       (191,623)
Financing activities
Bank indebtedness	$          14,945	$              203	$          15,894	$                56
Repayment of long-term debt	(10,001)	(81,860)	(14,302)	(83,069)
Proceeds from long-term debt	12,883	56,621	70,289	171,026
Proceeds from exercise of stock options	626	418	1,604	2,469
Purchase of non-controlling interest	—	(590)	(452)	(675)
Repurchase of common shares	(350)	—	(21,071)	—
Acquisition of shares held in trust	(11,181)	—	(11,181)	—
Principal lease payments	(4,908)	(5,145)	(10,807)	(10,543)
Cash flows provided by (used in) financing activities	$            2,014	$         (30,353)	$          29,974	$          79,264
Effect of exchange rate changes on cash and cash equivalents	63	2,231	(1,362)	2,143
Decrease in cash and cash equivalents	(44,739)	(35,110)	(40,119)	(6,137)
Cash and cash equivalents, beginning of period	139,902	216,440	135,282	187,467
Cash and cash equivalents, end of period	$          95,163	$        181,330	$          95,163	$        181,330
Supplemental information
Cash income taxes paid	$          24,403	$            3,408	$          27,749	$            8,129
Cash interest paid	$            9,218	$            3,356	$          22,953	$          13,786

* Certain amounts for the previously reported six months ended September 26, 2021 were re-presented in fiscal 2022 as a result of measurement period adjustments for the acquisitions of CFT and BioDot as required by IFRS 3, Business Combinations.

Please refer to complete Interim Condensed Consolidated Financial Statements for supplemental notes which can be found on the Company's profile on SEDAR at www.sedar.com and on the Company's website at www.atsautomation.com.

Notice to Reader: Non-IFRS Measures and Additional IFRS Measures
Throughout this document, management uses certain non-IFRS financial measures, non-IFRS ratios and supplementary financial measures to evaluate the performance of the Company.

The terms "EBITDA", "organic revenue", "adjusted net income", "adjusted earnings from operations", "adjusted EBITDA", "adjusted basic earnings per share", and "free cash flow", are non-IFRS financial measures, "EBITDA margin", "adjusted earnings from operations margin", "adjusted EBITDA margin", "organic revenue growth", "non- cash working capital as a percentage of revenues", and "net debt to adjusted EBITDA" are non-IFRS ratios, and "operating margin", "Order Bookings", "Order Backlog", and "book-to-bill ratio" are supplementary financial measures, all of which do not have any standardized meaning prescribed within IFRS and therefore may not be comparable to similar measures presented by other companies. Such measures should not be considered in isolation or as a substitute for measures of performance prepared in accordance with IFRS. In addition, management uses "earnings from operations", which is an additional IFRS measure, to evaluate the performance of the Company. Earnings from operations is presented on the Company's consolidated statements of income as net income excluding income tax expense and net finance costs. Operating margin is an expression of the Company's earnings from operations as a percentage of revenues. EBITDA is defined as earnings from operations excluding depreciation and amortization. EBITDA margin is an expression of the Company's EBITDA as a percentage of revenues. Organic revenue is defined as revenues in the stated period excluding revenues from acquired companies for which the acquired company was not a part of the consolidated group in the comparable period. Organic revenue growth compares the stated period organic revenue with the reported revenue of the comparable prior period. Adjusted earnings from operations is defined as earnings from operations before items excluded from management's internal analysis of operating results, such as amortization expense of acquisition-related intangible assets, acquisition-related transaction and integration costs, restructuring charges, and certain other adjustments which would be non-recurring in nature ("adjustment items"). Adjusted earnings  from operations margin is an expression of the Company's adjusted earnings from operations as a percentage of revenues. Adjusted EBITDA is defined as adjusted earnings from operations excluding depreciation and amortization. Adjusted EBITDA margin is an expression of the entity's adjusted EBITDA as a percentage of revenues. Adjusted basic earnings per share is defined as adjusted net income on a basic per share basis, where adjusted net income is defined as adjusted earnings from operations less net finance costs and income tax expense, plus tax effects of adjustment items and adjusted for other significant items of a non-recurring nature. Non-cash working capital as a percentage of revenues is defined as the sum of accounts receivable, contract assets, inventories, deposits, prepaids and other assets, less accounts payable, accrued liabilities, provisions and contract liabilities divided by the trailing two fiscal quarter revenues annualized. Free cash flow is defined as cash provided by operating activities less property, plant and equipment and intangible asset expenditures. Net debt to adjusted EBITDA is the ratio of the net debt of the Company (cash and cash equivalents less bank indebtedness, long-term debt, and lease liabilities) to adjusted EBITDA. Order Bookings represent new orders for the supply of automation systems, services and products that management believes are firm. Order Backlog is the estimated unearned portion of revenues on customer contracts that are in process and have not been completed at the specified date. Book to bill ratio is a measure of Order Bookings compared to revenue.

Operating margin, adjusted earnings from operations, EBITDA, EBITDA margin, adjusted EBITDA, and adjusted EBITDA margin are used by the Company to evaluate the performance of its operations. Management believes that earnings from operations is an important indicator in measuring the performance of the Company's  operations on a pre-tax basis and without consideration as to how the Company finances its operations. Management believes that organic revenue and organic revenue growth, when considered with IFRS measures, allow the Company to better measure the Corporation's performance and evaluate long-term performance trends. Organic revenue growth also facilitates easier comparisons of the Corporation's performance with prior and future periods and relative comparisons to its peers. Management believes that EBITDA and adjusted EBITDA are important indicators of the Company's ability to generate operating cash flows to fund continued investment in its operations. Management believes that adjusted earnings from operations, adjusted earnings from operations margin, adjusted EBITDA, adjusted net income and adjusted basic earnings per share are important measures to increase comparability of performance between periods. The adjustment items used by management to arrive at these metrics are not considered to be indicative of the business' ongoing operating performance. Management uses the measure "non-cash working capital as a percentage of revenues" to assess overall liquidity. Free cash

flow is used by the Company to measure cash flow from operations after investment in property, plant and equipment and intangible assets. Management uses net debt to adjusted EBITDA as a measurement of leverage of the Company. Order Bookings provide an indication of the Company's ability to secure new orders for work during a specified period, while Order Backlog provides a measure of the value of Order Bookings that have not been completed at a specified point in time. Both Order Bookings and Order Backlog are indicators of future revenues that the Company expects to generate based on contracts that management believes to be firm. Book  to bill ratio is used to measure the Company's ability and timeliness to convert Order Bookings into revenues. Management believes that ATS shareholders and potential investors in ATS use these additional IFRS measures and non-IFRS financial measures in making investment decisions and measuring operational results.

A reconciliation of (i) adjusted EBITDA and EBITDA to net income, (ii) adjusted earnings from operations to earnings from operations, (iii) adjusted net income to net income, (iv) adjusted basic earnings per share to basic earnings per share (v) free cash flow to its IFRS measure components and (vi) organic revenue to revenue, in each case for the three- and six-month periods ended October 2, 2022 and September 26, 2021 is contained in this news release (see "Reconciliation of Non-IFRS Measures to IFRS Measures"). This news release also contains a reconciliation of (i) non-cash working capital as a percentage of revenues and (ii) net debt to their IFRS measure components, in each case at both October 2, 2022 and March 31, 2022 (see "Reconciliation of Non- IFRS Measures to IFRS Measures"). A reconciliation of Order Bookings and Order Backlog to total Company revenues for the three- and six-month periods ended October 2, 2022 and September 26, 2021 is also contained in this news release (see "Order Backlog Continuity").

Note to Readers: Forward-Looking Statements
This news release, and results of operations of ATS contains certain statements that may constitute forward- looking information within the meaning of applicable securities laws ("forward-looking statements"). Forward- looking statements include all statements that are not historical facts regarding possible events, conditions or results of operations that ATS believes, expects or anticipates will or may occur in the future, including, but not limited to : the value creation strategy; the Company's strategy to expand organically and through acquisition; the ATS Business Model ("ABM"); completion of the ZIA acquisition; the announcement of new Order Bookings and the anticipated timeline for delivery; potential impacts on the time to convert opportunities into Order Bookings; various market opportunities for ATS; the Company's Order Backlog partially mitigating the impact of variable Order Bookings; rate of Order Backlog conversion to revenue; the potential impact of timing of customer decisions on Order Bookings, performance period, and timing of revenue recognition; expected benefits with respect to the Company's efforts to grow its product portfolio and after-sale service revenues; Company's goal of expanding its adjusted earnings from operations margin over the long term and potential impact of supply chain disruptions; expectation of synergies from integration of acquired companies; non-cash working capital levels as a percentage of revenues in the short-term and the long-term; expectation in relation to meeting liquidity and funding requirements for investments; potential to use debt or equity financing to support growth strategy; expected results of reorganization activity and their anticipated timeline; expected capital expenditures for fiscal 2023; the Company's belief with respect to the outcome of certain lawsuits, claims and contingencies; and the uncertainty and potential impact on the Company's business and operations due to the current macro-economic environment including the impacts of COVID-19, inflation, supply chain disruptions, interest rate changes, and the war in Ukraine.

Such forward-looking statements are inherently subject to significant known and unknown risks, uncertainties and other factors that may cause the actual results, performance or achievements of ATS, or developments in ATS' business or in its industry, to differ materially from the anticipated results, performance, achievements or developments expressed or implied by such forward-looking statements. Important risks, uncertainties and factors that could cause actual results to differ materially from expectations expressed in the forward-looking statements include, but are not limited to, the duration of the COVID-19 pandemic and its impact on the Company, its employees, customers, suppliers and the global economy; impact of regional or global conflicts; general market performance including capital market conditions and availability and cost of credit; performance of the markets  that ATS serves; industry challenges in securing the supply of labour, materials, and, in certain jurisdictions, energy sources such as natural gas; impact of inflation; interest rate changes; foreign currency and exchange risk; the  relative  strength  of  the  Canadian  dollar;  recessionary  risk;  impact  of  factors  such  as  increased pricing

pressure, increased cost of energy and supplies, and delays in relation thereto, and possible margin compression; the regulatory and tax environment; inability to successfully expand organically or through acquisition, due to an inability to grow expertise, personnel, and/or facilities at required rates or to identify, negotiate and conclude one or more acquisitions, including the ZIA acquisition, or to raise, through debt or equity, or otherwise have available, required capital; that the ABM is not effective in accomplishing its goals; that the timing of completion of new  Order Bookings is other than as expected due to various reasons, including schedule changes or COVID-19 pandemic-related factors, the customer exercising any right to withdraw the Order Booking or to terminate the program in whole or in part prior to its completion, thereby preventing ATS from realizing on the full benefit of the program; that some or all of the sales funnel is not converted to Order Bookings due to competitive factors or failure to meet customer needs; that the market opportunities ATS anticipates do not materialize or that ATS is unable to exploit such opportunities; variations in the amount of Order Backlog completed in any given quarter; timing of customer decisions related to large enterprise programs and potential for negative impact associated with any cancellations or non-performance in relation thereto; that the Company is not successful in growing its product portfolio and/or service offering or that expected benefits are not realized; that efforts to expand adjusted earnings from operations margin over long-term are unsuccessful, due to any number of reasons, including less than anticipated increase in after-sales service revenues or reduced margins attached to those revenues, inability to achieve lower costs through supply chain management, failure to develop, adopt internally, or have customers adopt, standardized platforms and technologies, inability to maintain current cost structure if revenues were to grow, and failure of ABM to impact margins; that acquisitions made are not integrated as quickly or effectively as planned or expected and, as a result, anticipated benefits and synergies are not realized; non-cash working capital as a percentage of revenues operating at a level other than as expected due to reasons, including, the timing and nature of Order Bookings, the timing of payment milestones and payment terms in customer contracts, and delays in customer programs; the failure to realize the savings expected from reorganization activity or within the expected timelines; that capital expenditure targets are increased in the future or the Company experiences cost increases in relation thereto; risk that the ultimate outcome of lawsuits, claims, and contingencies give rise to material liabilities for which no provisions have been recorded; and other risks and uncertainties detailed from  time to time in ATS' filings with securities regulators, including, without limitation, the risk factors described in ATS' annual information form for the fiscal year ended March 31, 2022, which are available on the System for  Electronic Document Analysis and Retrieval ("SEDAR") and can be accessed at www.sedar.com. ATS has attempted to identify important factors that could cause actual results to materially differ from current  expectations, however, there may be other factors that cause actual results to differ materially from such expectations.

Forward-looking statements are necessarily based on a number of estimates, factors and assumptions regarding, among others, management's current plans, estimates, projections, beliefs and opinions; the future performance and results of the Company's business and operations; the assumption of successful implementation of margin improvement initiatives; and general economic conditions and global events, including the COVID-19 pandemic.

Forward-looking statements included herein are only provided to understand management's current expectations relating to future periods and, as such, are not appropriate for any other purpose. Although ATS believes that the expectations reflected in such forward-looking statements are reasonable, such statements involve risks and uncertainties, and ATS cautions you not to place undue reliance upon any such forward-looking statements, which speak only as of the date they are made. ATS does not undertake any obligation to update forward-looking statements contained herein other than as required by law.

SOURCE ATS Automation Tooling Systems Inc.

David Galison, Head of Investor Relations 519-653-4483 x87185, [email protected]