ATS Corporation (ATS) Earnings Call Transcript & Summary

Thank you, operator. Good morning, ladies and gentlemen, and welcome to the ATS Annual Meeting of Shareholders for 2022. Please note that our remarks today are accompanied by a slide deck, which can be viewed via our webcast and available at atsautomation.com. My name is David McAusland. I'm a proud long-term shareholder of ATS and Chairman of the Board. I'm calling this meeting to order. Stewart McCuaig, Corporate Vice President and General Counsel, will act as Secretary; Andrew Hider, Chief Executive Officer and Director of ATS; and Ryan McLeod, Chief Financial Officer, are also participating and will be available to answer your questions later on in the meeting, the informal part. David Galison ATS Head of Investor Relations, will help us field those questions. As you can see from the titles of those participating, you can tell that shareholder engagement is rightly important to your Board and executive leadership team. Engagement comes in many forms and today centers on an agenda that covers important business items. As is our custom, we also wish to use the informal part of the meeting to engage in a discussion of our strategies and update you on business progress and market conditions. To set the stage for engagement, I will begin with a few observations on behalf of your Board. For the past 5 years, which is a long time in the world we now live in, has seen remarkable step change in scope and scale at ATS. Through acquisition and homegrown organic growth, revenue more than doubled from $1 billion to $2.2 billion or 16.6% on a 5-year compound annual growth basis. Net income more than tripled from $35 million to $121 million or 28% on a compound annual basis. On revenue growth and positive margin expansion our presence is in resilient regulated markets like life sciences, food, consumer products, and energy, intensified and deepened. And we've smartly shifted our automation business in transportation to high-growth electric vehicle opportunities that make great use of the sophisticated capabilities resident in your company. And with business growth, our global workforce of skilled, productive and dedicated people grew from 3,500 to more than 6,000 across an international footprint, which has more than doubled to more than 50 manufacturing locations and over 75 offices. It is easy to be accountable for a track record like this, which is the result of expansionary market conditions and the hard work done by our employees on behalf of so many great customers. But what's equally important to your board of both these results is that they tie back to our business model and strategies. Performance can't simply be a matter of having stance, it needs to be repeatable. Our Board and executive leadership team have spent countless hours to ensure the strategies and framework used to generate growth are appropriate and right for the times. On this basis, I can tell you that ATS is doing the right -- doing things right, deploying the balance sheet prudently and strategically, making deliberate risk management -- managed investments in full alignment to our ATS business model, pursuing a mix of high-quality long duration orders that benefit backlog and create some certainty in uncertain times and serializing a continuous improvement model mindset at every level. As the global economy shifts gears under the weight of higher interest rates and soaring inflation brought on by supply chain disruptions and geopolitical tensions, it is of critical importance to your Board that we operate with a disciplined business approach driven by a proven set of strategies embedded in the ATS business model. This discipline is what we expect of management that they are delivering. We can't forecast the future with any degree of certainty, especially given today's economic turbulence. But we can stand accountable for the past present performance and for providing confidence that our business model and corporate strategies are both right for the times and followed faithfully. As Chair, I can provide that confidence to you today, and I'm proud to do so. Credit to Andrew Hider, who notably celebrated his fifth anniversary as CEO in March. His management team and our global workforce -- congratulations to his management team and our global workforce for generating good results to date, great results to date and continuing to position ATS for a long-term success. As the Board's representative at this meeting, I am delighted to offer my sincere thanks to all ATS employees for a job well done. We are very proud of you. Serving as Chairman also affords me an insider view of the value provided by my fellow directors, whether it is weighing risks and opportunities, advancing our understanding of evolving ESG practices or working with management to find a better way with each of my fellow directors is committed to the betterment of ATS for all shareholders and deeply engaged in the task of delivering long-term shareholder value creation. I'm speaking of first Dave Cummings, Joanne Ferstman, Kirsten Lange, Mike Martino, Phil Whitehead and of course, Andrew, your CEO, who's a member of our board. Thank you, one and all, for creating a highly effective governance team. I'm very pleased to report all incumbent directors for standing for reelection today, providing continuity and depth of relevant experience that is uniquely valuable. You will be interested to note that it's not just ATS employees who strive for constant improvement. The Board subjects itself and all directors to performance assessments and operates with a continuous education program to ensure we operate according to best ESG practices. I'm proud of the work done to move us forward in all 3 areas of environmental, social and governance. ATS has committed to a long-term sustainability strategy embedded ESG is a priority and moved to develop clear lines of accountability for developing ESG policy for tracking performance against targets. For the release of our next ESG performance reports this fall. A final and most important thank you to our customers and shareholders. By owning our products and our shares, you serve as our North Star, and we are stronger because of your ongoing participation and interest. Now on to the business of the meeting. I now ask that the Annual Meeting of Shareholders of the corporation formally come to order. Once the formal part of the business of the meeting is complete, I will invite management presentations from Andrew Hider and Ryan McLeod. And then following those presentations, we will address any questions received through the course of the meeting using the instant messaging feature of the virtual interface. As I stated earlier, I am presiding the meeting as Chair, Stewart McCuaig, who will act as Secretary of the meeting, and David Galison will perform the moderator with respect to all questions that may be submitted. As matters of the business to be conducted today, we have the election of the directors and the reappointment of the corporation's auditors for the coming year. If there are no objections, I will ask Patty Sigiannis and Connor Brazeau of Computershare Investor Services to act as scrutineers for the meeting. The Secretary has advised me that the notice calling this meeting, together with the form of proxy and Management Information Circular have been made available to each Director of the corporation, the auditors of the corporation and to each intermediary and registered holder of common shares of the corporation of record as of June 16, 2022, the record date for the meeting all in accordance with applicable laws. These materials are available on the corporation's website at www.atsautomation.com and on the corporation's profile on SEDAR. Our transfer agent, Computershare Investor Services has attested to the proper mailing of the notice calling this meeting. There has been filed with me the proof of service of such mailing provided by the corporation's transfer agent. The scrutineers have provided me with their preliminary report regarding shareholder attendance at the meeting. Scrutineers report that there are common shares representing over 85% of all outstanding common shares of the corporation present at this virtual meeting or represented by proxy. Accordingly, I declare the requisite quorum of shareholders to be present and declare the meeting as duly and properly constituted for the transaction of business. I direct that the proof of mailing and the scrutineer's final report on attendance be annexed to the minutes of the meeting. As this meeting is being held virtually via live webcast, we think that it is necessary to set out a few rules for orderly conduct. I will list, one, questions can be submitted by using the instant messaging service of the Lumi virtual interface. Two, when asking a question, please indicate your name, which entity you represent, if any. And if you are a shareholder, duly appointed proxyholder or a guest. Any questions will be addressed during the question period at the end of the meeting, provided that should there be any questions regarding the formal procedural matters or directly related to motions for the meeting we will find a way to address them during the formal part of the business. Four, for the purposes of the meeting today, voting on all matters will be conducted by electronic ballot. Registered shareholders and newly appointed proxyholders will be asked to vote on each business item after the presentation of all business items. Five, once discussion on all items of business has been concluded, I will give you a minute to enter your votes if you haven't already voted by proxy, and I will then declare voting closed on all resolutions. Six, when you are asked to vote, you will receive a message on the virtual interface requesting you to register your votes. You will only have a certain amount of time to do so when the polls are open. So act promptly. Seven, when you have already voted -- if you have already voted in advance, please do not vote again online during the meeting unless you want to change your vote. If you vote again using the online ballot for your online vote during the meeting, we will revoke your previously submitted proxy. We will now proceed with the formal portion of today's meeting. I've been advised by Ryan McLeod, that he would be prepared to second each of the motions in respect to the items of business outlined in the management information circular. Accordingly, unless there are any objections, I will take such motions as seconded with no further action needed. The first item of business is the presentation of the corporation's consolidated financial statements for the year ended March 31, 2022, and the auditor's report thereon. Copies of these documents have been mailed to shareholders who requested them and are also available on the corporation's website and on SEDAR. It is not proposed to read the financial statements to the meeting. Receipt and presentation of the financial statements for the year ended March 31, 2022, are hereby acknowledged. I direct that these financial statements and the auditor's report be annexed to the minutes of the meeting. Ryan McLeod will review the results of ATS following the formal part of the meeting. So we will now proceed with the election of directors. The number of directors to be elected at the meeting has been fixed at 7. I move to nominate those directors specified in the Management Information Circular for election as directors of the corporation to hold office until the next Annual Meeting of Shareholders or until their successors are duly elected or appointed in accordance with the articles and bylaws of the corporation and take such motion as seconded by Ryan McLeod. So the proposed nominees are Dave Cummings, Joanne Ferstman, Andrew Hider, Kirsten Lange, Michael Martino, David McAusland and Phil Whitehead. If there are any further remarks with respect to the foregoing, please submit them now through the instant messaging service on the virtual interface.

[ Go for your ] remarks.

Thank you, Stewart. As there is no further discussion, I move that the nominations should be closed and take such motion as seconded by Ryan. We will now proceed with the reappointment of the auditors of the corporation. I move that Ernst & Young be reappointed as auditors of the corporation until the next Annual Meeting of Shareholders or until a successor is appointed and that the Board of Directors is authorized to fix the auditor's remuneration and take such motion as duly seconded by Ryan. Is there any discussion on this motion?

No discussion at this time.

Thank you, Stewart. As there is no further discussion, I will proceed with voting. On both of those matters. As we mentioned, voting will be conducted by electronic ballot. As a reminder, once again, if you have already voted in advance, do not move again unless you want to change your vote. If you vote again using the online ballot, your online vote will revoke your previously submitted proxy. I will now take a moment to ask that the balloting be opened to registered shareholders and duly appointed proxyholders. So the polls are now open. And at this point, all registered shareholders and fully appointed proxyholders who have properly logged in with their control numbers or username and wish to vote will be able to see on the screen all motions be brought before this meeting. Please register your votes by accessing the voting page and selecting for or withhold -- the For or Withhold buttons next to the name of each proposed director or as the case may be next to the resolution with respect to the appointment of Ernst & Young LLP as the corporation's auditors. Once the electronic balloting closes, the voting page will disappear, and your votes will be automatically submitted. So I'm just going to pause now briefly to allow any votes to be entered then I'll rejoin. [Voting]

Okay. So thank you very much. I now declare the polls closed. I've been advised by the scrutineers that a sufficient number of votes have been received to pass all of the resolutions before us today. Accordingly, I am pleased to announce that, one, each of the 7 nominees have been elected as directors of the corporation to serve until the next Annual Meeting of Shareholders or until their successors are elected or appointed. Two, the appointment of Ernst & Young LLP as the auditors of the corporation has been approved, and the Board of Directors of the corporation has been authorized to fix their remuneration. I direct that the results of the poll be included with the minutes of this meeting, and the final results of the voting will be announced in a press release in accordance with the policies of the TSX and filed on SEDAR. So ladies and gentlemen, that concludes the formal business brought before this meeting. As there is no further business, I declare the formal part of the meeting to be concluded. Thank you. Now it is time for the management presentations. Before the presentations begin, I would ask David to provide a caution with respect to forward-looking information. David?

We caution that the statements made in our oral and visual presentations may contain forward-looking information and our cautionary statement regarding such information, including the material factors that could cause actual results to differ materially from the statements and the material factors or assumptions applied in making the statements are detailed on Slide 8 of the slide deck. We will now view a short video and then Andrew will deliver his report. [Presentation]