STRONGER
TOGETHER
ATS ATS Automation
Annual Report 2022
1
Manufacturing Facilities
Offices
Manufacturing Facilities
Offices
Manufacturing Facilities
Offices
26,000+
Projects
completed
50+
Facilities
75+
Offices
20+
Countries
ATS at-a-Glance
ATS delivered exceptional business results during the second year of the pandemic and effectively managed challenges
relating to supply chain, inflation, recruitment and retention, and global uncertainty. ATS was able to successfully integrate
seven acquisitions, leverage innovation, and deliver outstanding solutions and service to customers while positioning our
Company for further growth. Backed by the ATS Business Model and a culture of continuous improvement, our people and
businesses are Stronger Together.
$2.2B
Revenue
A Year of Strong Growth
52.6%
Revenue growth
in F2022
6,000+
Employees
worldwide
ATA
Stock market
listing
$3.3B
Market
capitalization1
16.6%
Five-year
revenue CAGR
71.4%
Adjusted EBITDA
growth in F20222
25.2%
Five-year adjusted
EBITDA CAGR
1 Market capitalization as of June 28, 2022.
2 Non-IFRS measure. See “Non-IFRS and Other Financial Measures” in the Company’s fiscal 2022 Management’s Discussion and Analysis on page 51 of this report.
This annual report contains certain statements that may constitute forward-looking information within the meaning of applicable securities
laws (“forward-looking statements”). All forward-looking statements contained herein are qualified entirely by the information set out under
“Forward-Looking Statements” in the Company’s fiscal 2022 Management’s Discussion and Analysis on page 50 of this annual report.
ATS AUTOMATION /// ANNUAL REPORT 2022 Once again, our people showed their
commitment and resilience as the
pandemic receded and other issues moved
to the forefront. As a result, ATS delivered
record results in many areas and ended
the year with strong Order Bookings and
a solid Order Backlog, positioning us for
robust performance in fiscal 2023.
Contents
United by Our Purpose 3
Our Story 2
The Strength of Our Strategy 6
Management’s Responsibility for Financial Reporting 53
Consolidated Financial Statements 59
Board of Directors 110
Shareholder Information 112
Our Values 3
Management’s Discussion & Analysis 20
Message from Our CEO 4
Independent Auditor’s Report 54
Notes to Consolidated Financial Statements 64
(in millions of dollars, except per share data)
Revenues
Earnings from operations
Adjusted earnings from operations1
EBITDA1
Adjusted EBITDA
Net income
Basic earnings per share
Adjusted basic earnings per share1
Order Bookings1
Order Backlog1
Fiscal 2022
$2,182.7
Fiscal 2021
$1,430.0
Fiscal 2020
$1,429.7
$186.6
$292.4
$302.0
$343.9
$121.4
$1.32
$2.17
$2,456
$1,438
$119.6
$163.2
$190.6
$200.7
$64.1
$0.70
$1.07
$1,626
$1,160
$95.6
$157.4
$167.0
$195.1
$52.9
$0.57
$1.06
$1,468
$942
1 Non-IFRS measure. See “Non-IFRS and Other Financial Measures” in the Company’s fiscal 2022 Management’s Discussion and Analysis on page 51 of this report.
ATS is listed on the Toronto Stock Exchange under the symbol “ATA.”
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ATS AUTOMATION /// ANNUAL REPORT 2022
Our Story
ATS is a global provider of automation solutions and service to companies around the world. Our industry-leading automation
and integration solutions, our expanding range of services and products, including our increasingly sophisticated digital
offering, help us streamline and optimize manufacturing operations in markets such as life sciences, food & beverage,
transportation, consumer products and energy.
We work with our customers to ensure that tomorrow is better than today. Guided by the ATS Business Model, we have
established a company-wide culture of accountability, innovation and continuous improvement. Effectively leveraging the
experience and capabilities of our people and operations around the world to achieve growth in new markets and
geographies shows that we are Stronger Together.
What We Do
Who We Serve
ATS teams excel at delivering fully customized machines,
systems and enterprise programs, as well as standardized
products and modular capabilities, which can be scaled to
meet demand.
We use our extensive knowledge base and global capabilities
in custom automation, repeat automation, automation
products and value-added services, including pre-automation
and after-sales services, to address the sophisticated
manufacturing automation systems and service needs of
multinational customers.
2
Our global customers are in five key markets: life sciences,
food & beverage, energy, transportation and consumer
products. While diversified by region and sector, our customers
all need high-precision equipment to make their products at
the highest levels of quality, on time and on budget.
Our Life Sciences customers produce a variety of medical
devices, pharmaceuticals, radiopharmaceuticals and chemicals.
Life sciences represents more than half of our business by
revenue, up from one-third of our business a decade ago.
Our Food & Beverage customers process and package fresh
food and beverages.
Our Energy customers include energy technology companies
in nuclear and solar power.
We serve Transportation customers primarily in the electric
and hybrid vehicle, and aerospace sectors.
Our Consumer market includes warehouse automation,
personal care and cosmetics, electronics and durable goods
manufacturers.
How We Operate
The ATS Business Model, or ABM, is our playbook. Since its
introduction, it has become our organizational DNA. The ABM
unites our decentralized operations by providing standard
methods and metrics across international offices and
building a shared culture of excellence and continuous
improvement in all areas of our business.
As ATS grows, both organically and through acquisitions, the
ABM enables us to welcome and integrate new teams at
acquired companies. It helps to show how, through effective
collaboration, we will expand into new markets, develop
innovative solutions, services and products, and create
shareholder value by being Stronger Together.
ATS AUTOMATION /// ANNUAL REPORT 2022 F2022 Revenue by Segment
$1,113.0M
Life Sciences
$395.0M
Food & Beverage
$293.8M
Transportation
$269.0M
Consumer Products
$111.9M
Energy
F2022 Revenue by Region
$1,114.3M
North America
$822.9M
Europe
$245.5M
Asia/Other
F2022 Total Revenue
$2,182.7M
United by Our Purpose
Creating solutions that positively
impact lives around the world
Our Values
People
Having the best team and winning as a team
• We continuously work to develop, engage, empower and energize our people
• We support our people to foster a safe, positive and inclusive work environment
where everyone is respected and given the opportunity to do their best
Process
Our commitment to continuous improvement
• We align around the ATS Business Model to pursue continuous improvement in
all aspects of our business
• With a balance of strategic thinking and tactical execution, we ensure that we
are creating value for our customers, today and in the future
Performance
Delivering results for our customers, shareholders and employees
• We compete to win every day, always with uncompromising integrity and holding
ourselves to the highest ethical standards
• We develop innovative solutions to complex problems and provide unique value
that fuels growth in our markets
• We own our results and have full accountability for creating value for our
customers and shareholders
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ATS AUTOMATION /// ANNUAL REPORT 2022 Message from Our CEO
Fiscal 2022 was, by any measure,
an extraordinary year for ATS.
The passion and drive of our people enabled us to
successfully negotiate the second year of the pandemic and
the challenges of supply chain disruptions, rising inflation and
global political uncertainty. We met them all head-on to deliver
record performance across a range of metrics while remaining
true to our purpose: creating solutions that positively impact
lives around the world. Across the Company, our people
continually showed resilience and ingenuity in overcoming
obstacles while also demonstrating the commitment to
customers, shareholders and each other that has defined our
approach from the beginning. We persevered, overcame and
delivered. We are Stronger Together.
Driving Value for Shareholders
Delivering Strategic Growth
Fiscal 2022 presented the world with an uncertain and
challenging business environment. However, history shows
that those conditions can also create opportunity, and, in that
environment, ATS was able to deliver double-digit growth. At
the same time, in line with our strategy, we achieved on-target
contributions from our recent acquisitions. As a result, our
total revenues for fiscal 2022 were up 53%, which includes
20% from organic growth. In addition, our net income increased
by 89% on a year-over-year basis, and our full-year Order
Bookings, boosted by contributions from our acquired
businesses, were up by 51%. We also enjoyed a corresponding
share performance. Our adjusted basic earnings per share
were $2.17, compared to $1.07 a year ago.
During the year, critical wins from several divisions, including
Life Sciences, Food & Beverage, and Transportation, made vital
contributions to our booking performance. Life Sciences, in
particular, delivered strong performance in the critical sectors
of medical devices, pharma and radiopharma, accounting for
more than 50% of our year-closing Order Backlog. We ended
the year with a $1.4 billion Order Backlog and a book-to-bill
ratio of 1.13x setting us up for favourable organic growth.
The size and composition of the Order Backlog, which confirm
strong demand across our product and service offering,
provide ATS with a solid foundation for our business as we
head into a new fiscal year.
• 16.6% compound annual revenue growth over five years
• 25.2% compound annual growth in adjusted EBITDA over
five years
• 15.8% adjusted EBITDA margin
4
Throughout fiscal 2022, we continued to deploy capital
strategically, maintaining an efficient balance sheet while
acquiring companies that can quickly contribute to our bottom
line. Over the course of the year, we invested approximately
$745 million to complete seven acquisitions (see “Stronger
through Acquisitions” on page 13) in areas where we see
highly attractive opportunities in both the near and long term.
These acquisitions provide us with greater reach and scale,
and expand our capacity to meet the evolving needs of our
customers. In fiscal 2022, our existing businesses also
delivered strong organic growth. In addition, we are excited by
the potential we see in the development of after-sales
service, which provides predictable revenues while helping
strengthen our client relationships further. Finally, we look
forward to exciting opportunities across our lines of business
as we further leverage digitalization and innovation.
Stronger with the ABM
The ATS Business Model – or the ABM, as it’s better known –
is now in its fifth year. And over that time, as we’ve grown,
evolved our business, entered and exited markets and
successfully met the challenge of a global pandemic, it has
shown its value every day. It is not simply a management tool
or approach; it is the defining element of our culture. Our
playbook for solving problems, from the shop floor to a
continent away, is an explainable, repeatable model for
finding solutions and driving innovation. As we’ve grown, it
has provided us with a common language, shared across our
Company and operations, that has helped us to successfully
pursue and integrate acquisitions (see story about M&A
award on page 19) and to connect with new colleagues.
ATS AUTOMATION /// ANNUAL REPORT 2022 Supporting the People of Ukraine
As fiscal 2022 came to a close, we, like the rest of the world, were concerned and saddened by events in Ukraine. ATS
has a small operation in Ukraine that serves as an internal supplier and employs 70 people. Since the crisis began, we
have kept in contact with our employees and are extending additional assistance to our team members and their families
to help during this challenging time. We also made a $200,000 donation to the Canadian Red Cross through our ATS
Community Outreach program. 100% of the donated funds will go toward providing aid to Ukrainians: helping fund mobile
health teams, meeting emergency needs and supporting families displaced by war.
By driving continuous improvement and innovation, and
welcoming great ideas, wherever they come from, the ABM
has also been instrumental in helping acquired companies
bring the best of their culture to ATS.
Our Company culture was recognized this year with two
notable top employer awards. First, Forbes magazine
included ATS on its Canada’s Best Employers list. This award
is based on direct and indirect recommendations from
employees and sector peers and a willingness of employees
to suggest ATS as an employer to their friends. Later,
Canada’s Top 100 Employers named ATS as one of Waterloo
Area’s Top Employers for 2022. For over 40 years, Waterloo
Region has been our home, and this award is a great honour
for our organization.
Looking Ahead
For ATS, the pandemic was an important but not a defining
factor of fiscal 2022. Using our “Forward Together” pandemic
response playbook, developed in fiscal 2021, we collaborated
effectively, responded rapidly and met our customers’ needs.
However, as the pandemic recedes and the world of work
evolves, we need to remember the lessons we learned about
adaptability and not being limited by geography, even as we
embrace the opportunity to meet with our customers and join
with colleagues face to face.
Moving into fiscal 2023, we will continue to look for growth in
our strategic industries and sectors – such as life sciences,
food & beverage, and energy – where there is a high barrier
to entry and value placed on exceptional quality. Our
performance over the year shows that we can support one
another, colleagues and customers, across a range of
evolving challenges, including inflation and supply chain
issues. As companies move to grow their businesses,
improve quality, find cost savings or de-risk their operation,
they will come to ATS for proven solutions and support.
Innovation and the growing impact and importance of
digitalization also present tremendous opportunities for ATS.
Building on our global reputation as an automation solutions
provider, we look forward to providing our customers with
game-changing strategic intelligence.
I believe we will remember fiscal 2022 as a pivotal year for
our Company. In 2017, we introduced the ABM. Reflecting on
the last five years, it has been a remarkable journey for our
Company. We have been able to drive change, create growth
and deliver value through our focus on People, Process and
Performance. In five years, we have been able to more than
double our revenues and triple our profitability. We have
entered new markets and segments, and invested in people
and technology. In a few short years, we have laid a
foundation for lasting growth. And in many ways, we are just
getting started.
I want to thank our leaders and employees for the energy and
commitment they put into making tomorrow better than today.
I also want to thank our customers for their confidence in
ATS. There is no doubt that, for our Company and the world,
there are still many challenges on the horizon, but I also
believe we will meet those challenges because, as this year
has shown, we are Stronger Together.
Sincerely,
Andrew Hider
Chief Executive Officer
ATS Automation
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ATS AUTOMATION /// ANNUAL REPORT 2022 ATS AUTOMATION /// ANNUAL REPORT 2022
The
STRENGTH
of Our Strategy
ATS is recognized in markets around the world for innovative solutions,
outstanding service and exceptional quality. From this foundation,
we expect to grow in scale and capabilities.
We are a global automation leader, with over 6,000 employees, more than
50 manufacturing facilities and over 75 offices in over 20 countries.
We are known for supporting our customers with practical solutions and
strategic insight, and our value as a strategic partner will increase as we
improve our capacity to leverage the insights that come through digitalization
and the Industrial Internet of Things (IIoT). In a complex world, our strategy
remains clear: to build our Company and create lasting value for our
customers and shareholders, we will Build, Grow and Expand.
6
7
ATS AUTOMATION /// ANNUAL REPORT 2022 ATS Building Together
For over four decades, ATS has built sustainable value for our stakeholders – shareholders, customers, employees and
communities – always working to make tomorrow better than today. Founded in Cambridge, Ontario, in 1978, we are
recognized worldwide for developing innovative approaches and solutions to complex challenges. We help make our
customers’ businesses better. From that foundation, we have built a global company that employs over 6,000 people at
more than 50 manufacturing facilities in over 75 offices in North America, Europe and Asia.
ATS is a solutions provider. Since our founding, we have
been helping our customers evaluate, streamline and
optimize the efficiency of their manufacturing operations. Our
success is built on our people, our customer-first perspective
and our core engineering and process automation skills. Like
a good engineer, our team is characterized by adaptability,
relentless curiosity, and an appetite for problem-solving.
Those characteristics are reflected in our playbook, the
ABM, its three pillars of People, Process and Performance,
and its focus on continuous improvement. The foundation
that the ABM provides for our people, in turn provides ATS
with a foundation for long-term growth and expansion. In
addition, the ABM gives us a reliable and repeatable model
for analyzing challenges, breaking them down and
developing solutions.
The ABM aligns with and supports our effort to build an
outstanding team and culture that can draw upon our
people’s diverse strengths and perspectives. In recent years,
it has become increasingly clear that a strong and welcoming
culture that fosters uniqueness and belonging is key to
attracting and retaining the talent we need to grow. People
are what make us successful. That is why we make it a
priority to be sure we have the right people in the right roles
making the right decisions at the right times.
We maintain a constant focus on talent management and
personal development. People come to ATS with outstanding
skills, and we do our best to support them in building upon
those skills. Experience shows us that investing in
employees – helping them develop their capabilities and
achieve their potential – delivers an outstanding return.
During the year, we tracked engagement and reached out to
build even stronger connections with our employees.
Engagement and open communication help to provide
insights into every aspect of our operations, which, in turn,
makes ATS more competitive and an employer of choice for
talented people.
From this foundation, over the last five years we have
doubled our revenue and tripled our profitability. These are
remarkable achievements, but our goal is to build the best
ATS, not the biggest. That goal is aligned with our “value
drivers”: eight metrics we use to gauge our performance in
everything we do. Using standardized performance
measurements allows us to compare “apples to apples”
across our various businesses and activities. They show how
we deliver attractive returns for our shareholders, help
improve our customers’ operations and provide value for our
people as we pursue continuous improvement. The metrics
also reveal where we may need to rethink our approach and
where additional resources could be required. They also
show what we’re doing right. Our value drivers give us a star
to aim for and a platform to build on.
8
ATS AUTOMATION /// ANNUAL REPORT 2022 Growing through Collaboration
In 2021, we introduced a leading-edge sterile filling system
that leverages the capacity of several ATS businesses and
products – notably, Comecer, ATS Life Sciences and the ATS
SuperTrak PHARMA™ system. This is the first time SuperTrak
PHARMA™, an innovative solution for fast asynchronous
conveyance, has been integrated into a Comecer aseptic
isolator. The benefits of this approach include:
•
•
•
•
•
increased application and filling flexibility;
improved automated manufacturing capacity, reducing
the need for manual intervention;
lowered particle generation as a result of minimal
moving components;
significantly increased speeds compared to traditional
transport systems; and
an isolator that complies with Grade A air quality
requirements while in operation.
Together, Comecer, ATS Life Sciences and ATS SuperTrak
PHARMA™ are providing a faster, cleaner, more efficient and
more flexible solution than comparable offerings. From an
ATS perspective, this also highlights how our distinct but
complementary businesses and divisions can collaborate
effectively while providing a compelling demonstration of our
Build, Grow and Expand value creation strategy in action.
Order Bookings
EBIT Margin
Revenues
Our Value
Drivers
Working Capital
On-Time Delivery
Internal Fill Rate
Quality
Employee Turnover
Financial
Customer
People
9
ATS AUTOMATION /// ANNUAL REPORT 2022 ATS AUTOMATION /// ANNUAL REPORT 2022
Driving Strong
GROWTH
In a challenging year, our understanding of client needs, our
capacity for making operations more efficient and productive,
and our strong knowledge of the markets we serve, backed by
the ABM, all helped drive strong growth for ATS.
Throughout fiscal 2022, our business evolved as we made
accretive acquisitions and operating segments such as life
sciences, food & beverage, electric vehicles, energy and
after-sales service all demonstrated solid performance and
exciting potential.
1 0
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ATS AUTOMATION /// ANNUAL REPORT 2022 Energizing Growth in EV
There are currently 10 million electric vehicles (EV) on the
road, and the number is steadily increasing. UBS Financial
Group predicts that by 2040 all new cars will be battery-
powered. In March 2022, ATS Industrial Automation opened a
240,000 sq. ft. electric battery assembly plant in Lewis Center,
Ohio. The facility currently produces EV batteries for one of the
world’s leading automakers. In anticipation of growing demand
for industrial automation in the fields of energy, mobility and
specialty automation projects, the construction of an additional
240,000 sq. ft. facility is currently underway.
Manufacturers use ATS systems to build their products, and,
to date, we’ve made and delivered over 70 EV battery
assembly systems to customers worldwide. As a result, our
systems and expertise play a crucial role in helping produce
vehicles the world needs to achieve a decarbonized future.
ATS has a long-standing relationship with Bruce Power, which
owns and operates the Bruce Power nuclear reactor, and
received a $30 million Order Booking, which was added to
the Company’s Order Backlog for the second quarter of fiscal
2022. The order relates to refurbishing Bruce Power’s Unit 3
reactor, and includes an industry first: automating the
installation and inspection of calandria tubes. ATS will also
provide training and technical support to the Bruce Power
team, as well as spare replacement parts.
Across all of our groups and divisions, we are growing our
global service offerings, including complete life-cycle
solutions – from spare parts during the pre-installation
phase, to on-demand training using SmartCoach, after-sales
service and system upgrades at the end of life.
Our focus on high-potential sectors guides us with respect to
acquisitions. Since 2017, the year we adopted the ABM, ATS
has acquired 14 companies aligned with our M&A strategy.
Though we have acquired companies across a variety of
sectors, the shared features of tight regulation, technical
sophistication and a demand for quality make the ideal
candidates for applying the ABM. The ABM is our playbook
and provides us with a common language for communicating
with new teams and organizations and successfully
integrating them into our Company. Getting buy-in and support
from acquired companies is crucial to our growth and
expansion, allowing us to move forward together as one ATS.
Over the last five years, ATS has grown organically and
through acquisition, thanks to our strategic efforts to identify
and leverage what we can do best, which has led us out of
sectors where we cannot create value and into the right
market opportunities. We focus on closely regulated,
technically sophisticated markets with a high entry barrier
and where recognized quality is sought after and rewarded.
In addition, these sectors also exact a high toll on failure.
Consequently, while price is always a consideration, these
factors allow us to compete on technical capacity and quality
rather than just price. Our success in these markets further
demonstrates the importance of the ABM and our
commitment to continuous improvement.
We seek to grow by adding products and gaining clients in
attractive segments such as life sciences, electric vehicles,
food & beverage, and energy.
ATS Life Sciences provides high-quality, high-value
automation solutions to manufacturers of medical technology
and pharmaceutical products, where regulatory compliance
is critical. In the first quarter of fiscal 2022, Life Sciences
recorded a $120 million Order Booking from a global medical
device company for a fully automated manufacturing
solution. The order comprises the manufacture, build,
delivery and installation of several fully automated
manufacturing systems that will enable the customer to
expand its worldwide operating footprint. A follow-on program
that builds on our relationship with the customer
incorporates many of our proprietary technologies and
products, as well as post-installation training and support.
1 2
ATS AUTOMATION /// ANNUAL REPORT 2022 Stronger through Acquisitions
Since the introduction of the ABM in 2017, ATS has acquired 14 companies, in addition to intellectual properties from various
businesses, that complemented our operations in life sciences, food & beverage, and process automation.
Some of the companies, such as CFT and Comecer, were acknowledged leaders in their sector with large customer bases. Others
were smaller specialist or consulting firms, with skills and expertise that would help improve the capacity of our businesses.
All of them align with our value creation strategy and our goal to enter new markets, establish new business platforms and
expand the range of services, products and innovation that we can offer our customers. Our acquisitions have all created value,
demonstrated potential synergies with our existing operations, and quickly adapted to and adopted the ABM.
Fiscal 2022
Fiscal 2021
BioDot, Inc. – Manufactures automated fluid
dispensing systems for point-of-care and clinical
diagnostic labs. BioDot expands ATS Life
Sciences’ capabilities in precise, low-volume
fluid dispensing.
NCC Automated Systems Inc. – Provides
engineered-to-order sanitary automation solutions
and stand-alone precision conveyance equipment
that serves customers in several attractive
sectors, including food & beverage.
SP Industries, Inc. – Designs and manufactures
high-grade biopharma processing equipment, life
sciences equipment and lab apparatus products.
Extends our research and commercial capabilities.
Control and Information Management Ltd. – An
industrial automation system integrator that will
expand our automation and service capabilities for
biopharma, pharmaceutical and other industries
while also enhancing our digital strategy.
BLSG AG – A consulting company specializing in
process engineering and operational excellence
that adds to our PA business’ capacity to serve
customers from problem identification to solution
implementation.
DF S.r.l. – A specialized manufacturer of
pharmaceutical processing and packaging
equipment and systems that complements our
Comecer business and enhances its value
proposition to customers.
HSG Engineering S.r.l. – An automation system
integrator primarily serving the pharmaceutical
sector. Now part of our process automation (PA)
business, it deepens PA’s domain knowledge in
the biopharma and pharmaceutical sectors.
G R O U P
CFT S.p.A. – A global supplier of automated
processing and packaging equipment to the food
& beverage equipment market that will help us
establish a broader growth platform in the
regulated food & beverage equipment market.
Inimco CV – Offers knowledge, resources and
loT-based solutions for the process and
manufacturing industry. Allows customers to gain
insights into their machine and productivity data,
improve operational efficiency and engage with
third parties.
Fiscal 2020
Marco Limited – Provides yield control and recipe
formulation systems to help customers in the
food, nutraceuticals and cosmetics sectors
increase productivity and meet stringent industry
regulations. Supports our entry into a product-
based, niche segment of the food industry.
IXLOG Unternehmensberatung GmbH – A specialist
in business process optimization, business
intelligence and analytics, primarily for large and
medium-sized industrial manufacturing customers.
Expands PA’s data analytics and business
intelligence offerings.
Industrial Automation Partners BV – Supplies
process automation services to international
companies and enhances PA’s overall offering.
Fiscal 2019
Comecer S.p.A – A leader in designing,
engineering, manufacturing and servicing advanced
aseptic containment and processing systems for
the nuclear medicine and pharmaceutical
industries. Strengthens our offering to the
pharma and biopharma sectors while adding
radiopharmaceuticals to our life sciences platform.
KMW GmbH – A supplier of custom micro-assembly
systems, critical to components in electric vehicles,
and test equipment solutions that significantly
enhances our offering in the EV market.
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ATS AUTOMATION /// ANNUAL REPORT 2022 ATS AUTOMATION /// ANNUAL REPORT 2022
Expanding
OPPORTUNITY
ATS continues to evolve in line with our strategy to expand our reach and offering. Within the
last five years, we have significantly grown our presence in life sciences, entered new markets,
such as food & beverage, and made significant investments in innovation to accelerate the
development of fresh thinking into practical solutions, products and services for our customers.
We have achieved growth through diligent acquisitions and will continue to pursue that model. By
extending our global presence and scale, ATS is better positioned to serve multinational customers.
With over 75 locations worldwide, we have a competitive edge when it comes to winning large,
globe-spanning customer programs and providing life-cycle-oriented service programs to customers’
global operations. Our scale also opens the door to help customers looking to take risk out of their
supply chains by leveraging the market insight and relationships that come with a global presence.
1 4
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ATS AUTOMATION /// ANNUAL REPORT 2022 Our offerings continue to broaden and diversify. While our
roots are in systems integration, which remains an integral
part of our work, ATS has a growing range of proprietary
technology and original equipment that we can offer
customers. We are also home to an expanding number of
widely recognized and well-regarded brands, including SP,
NCC, BioDot, IWK, Comecer and MARCO. The presence
of these brands in our portfolio enhances our global
reputation and provides us with equity we can leverage
to attract and win new customers.
After-sales service is becoming another critical avenue of
growth for ATS. By drawing upon our knowledge of customers’
needs and systems, we will make it clear that after-sales
service is better understood as strategic support. We are not
simply replacing parts or even anticipating obsolescence.
Instead, we are helping clients to combine their data with
ours so that they can leverage an understanding of their
systems and processes to find opportunities to become more
efficient, pursue growth and open new markets.
Across ATS, we are gaining momentum as we move toward
digitalization, drawing machine and systems data from our
automation products and other services, as well as the
Industrial Internet of Things (IIoT), and using data analytics
to provide customers with real-time, actionable reporting and
insight into their business. Our capacity to leverage data on
behalf of our customers and drive improvements in their
operations will expand our relationship with customers from
that of a trusted supplier to becoming a true strategic
resource and partner.
Increasingly, companies and their key stakeholders are
acknowledging the links between sustainability, innovation
and superior long-term performance across various metrics.
ATS is committed to operating sustainably. We also offer
many solutions and services that help our customers
achieve or progress toward their sustainability goals. Using
electromagnetic gates (rather than pneumatic gates) to
direct parts and products on assembly systems, for example,
is faster and much more energy efficient. Recently, we also
helped develop a digital offering that will enable a customer
to measure their carbon footprint across their factory floor,
and we are working on similar products for other customers.
Sustainability is a key priority and an exciting opportunity
for ATS.
In 2020, we opened the first ATS Innovation Centre at
our Cambridge Campus. Innovation, the ability to identify
obstacles and opportunities others cannot see, and to
create answers and solutions others cannot provide, is
an essential contributor to our long-term growth. Guided by
the ABM, we are investing time and resources into further
strengthening our organization-wide culture of innovation
and continuous improvement.
1 6
ATS AUTOMATION /// ANNUAL REPORT 2022 Stronger with the ABM
Fiscal 2022 marked the fifth year of the ATS Business Model – the ABM – a business management system that ATS
developed to enable the Company to pursue its strategies, outpace growth in our chosen markets and drive continuous
improvement in everything we do.
The ABM is focused on delivering results in three essential areas:
People
Developing, engaging and empowering ATS’ people to build the best team.
Process
Aligning ATS’ people to implement and continuously improve robust and disciplined
business processes throughout the organization.
Performance
Consistently measuring results in order to yield world-class performance for our
customers and shareholders.
17
ATS AUTOMATION /// ANNUAL REPORT 2022 Our success in integrating acquisitions during the pandemic
provides a powerful confirmation that the ABM – designed to
be expansive and flexible – is much more than an approach
to process improvement. The ABM is a lens for looking at
any organizational challenge and a proven method for quickly
generating, evaluating and applying ideas and solutions.
It is also an essential tool for embedding a problem-solving
mindset across the Company – as applicable to sales and
service as it is to addressing production bottlenecks.
When the pandemic was declared in March 2020, we used
the ABM to help develop a company-wide response, focused
on ensuring the health and mental wellness of our employees
while still supporting our customers. Subsequently, we have
taken a similar approach to managing urgent issues such
as inflation and the supply chain crisis.
We have learned over the last five years that the ABM
plays a crucial role in successfully integrating acquired
companies. The fundamentals of the ABM include agreeing
on metrics that align with our eight value drivers, putting
daily visual management in place so that we see problems
and solutions, and using Kaizen techniques to solve
problems and seize opportunities. By providing common
frameworks and references, the ABM becomes a shared
language, spoken throughout ATS, which is invaluable for a
decentralized organization.
In fiscal 2022, we conducted a mix of virtual and onsite ABM
bootcamps and Kaizen. Initially, the onsite bootcamps were
intensive three-day sessions that contributed to team
building as well as problem solving. Subsequently, driven
by the pandemic and an evolving training mindset, we
developed a virtual bootcamp that takes place over seven
weeks. The new format emphasizes the importance of both
teamwork and self-learning and allows for more activities
that can be applied to the business and more time spent on
building case studies for implementing improvements in a
particular business segment.
We held 89 events over the year, across our geographies,
including our annual week-long President’s Kaizen events,
focusing on issues ranging from responding to supply chain
challenges, improving engineering efficiency, targeted value
selling, capture rate improvement and optimizing sales
processes at three businesses: Comecer, SP and DF. Our
Electric Vehicle team also held a joint Kaizen with a leading
automotive client aimed at enhancing machine throughput
and supporting customer growth.
1 8
ATS AUTOMATION /// ANNUAL REPORT 2022 Best Cross-Border M&A Award for CFT Acquisition
On May 12, 2022, ATS was honoured to receive the award
for “Top Cross-Border M&A Deal into Italy” given by KPMG,
Fineurop Soditic and Class Editori.
The award was given in recognition of our 2021 acquisition of
CFT S.p.A., an established global supplier of processing and
packaging equipment to the food & beverage industry.
Operating in a highly regulated sector with a high cost of
failure and low cyclicality, as well as exciting growth potential,
CFT aligned perfectly with our acquisition strategy. It also
aligned with ATS through its strong embrace of the ABM, which
was introduced to CFT as a “common language to create a
widespread culture.” During a visit to CFT, Jeremy Patten,
President, Products and Food Technology, observed, “I’m
extremely excited to see ABM become part of the CFT Group
because we can really make this the best place to work.” In
his 2021 Christmas message to staff, CFT CEO Alessandro
Merusi also noted that the “ABM can make a fundamental
contribution to continuous improvement.” Acquisitions are
notoriously challenging business arrangements. The ABM,
which unites all ATS companies, has been a decisive factor
in delivering positive outcomes for our acquisition strategy.
“I’m extremely excited to see
ABM become part of the CFT Group
because we can really make this
the best place to work.”
– Jeremy Patten, President, Products and
Food Technology
“The ABM can make a
fundamental contribution to
continuous improvement.”
– Alessandro Merusi, CEO, CFT Group
19
ATS AUTOMATION /// ANNUAL REPORT 2022 Management’s Discussion
and Analysis
For the Year Ended March 31, 2022
This Management’s Discussion and Analysis (“MD&A”) for the year ended March 31, 2022 (fiscal 2022) is as of May 18, 2022.
It provides information on the operating activities, performance and financial position of ATS Automation Tooling Systems Inc.
(“ATS” or the “Company”) and should be read in conjunction with the audited consolidated financial statements of the Company
for fiscal 2022, which have been prepared in accordance with International Financial Reporting Standards as issued by the
International Accounting Standards Board (“IFRS”) and are reported in Canadian dollars. All references to “$” or “dollars” in this
MD&A are to Canadian dollars unless otherwise indicated. Additional information is contained in the Company’s filings with
Canadian securities regulators, including its Annual Information Form for fiscal 2022, found on the Company’s website at
www.atsautomation.com and on SEDAR at www.sedar.com.
Important Notes
Forward-looking statements
This document contains forward-looking information within the meaning of applicable securities laws. Please see “Forward-
Looking Statements” for further information on page 50.
Non-IFRS and other financial measures
Throughout this document, management uses certain Non-IFRS financial measures, Non-IFRS ratios and supplementary
financial measures within the meaning of applicable securities laws to evaluate the performance of the Company. See
“Non-IFRS and Other Financial Measures” on page 51 for an explanation of such measures and “Reconciliation of Non-IFRS
Measures to IFRS Measures” beginning on page 41 for a reconciliation of Non-IFRS measures.
Company Profile
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 or find us on
social media.
2 0
ATS AUTOMATION /// ANNUAL REPORT 2022
Strategy
To drive the creation of long-term sustainable shareholder value, the Company employs a three-part value creation strategy:
Build, Grow and Expand.
Build: To build on the Company’s foundation and drive performance improvements, management is focused on the
advancement of the ATS Business Model (“ABM”), the pursuit and measurement of value drivers and key performance
indicators, a rigorous strategic planning process, succession planning, talent management, employee engagement, and
instilling autonomy with accountability into its businesses.
Grow: To drive organic growth, ATS develops and implements growth tools under the ABM, provides innovation and value
to customers and works to grow recurring revenues.
Expand: To expand the Company’s reach, management is focused on the development of new markets and business
platforms, the expansion of service offerings, investment in innovation and product development, and strategic and
disciplined acquisitions that strengthen ATS.
The Company pursues all of its initiatives using a strategic capital allocation framework in order to drive the creation of
long-term sustainable shareholder value.
ATS Business Model (“ABM”)
The ABM is a business management system that ATS developed with the goal of enabling the Company to pursue its
strategies, outpace the growth of its chosen markets, and drive continuous improvement year-over-year. The ABM emphasizes:
• People: developing, engaging and empowering ATS’ people to build the best team;
• Process: aligning ATS’ people to implement and continuously improve robust and disciplined business processes
throughout the organization; and
• Performance: consistently measuring results in order to yield world-class performance for our customers and
shareholders.
The ABM is ATS’ playbook, serving as the framework to achieve business goals and objectives through disciplined,
continuous improvement. The ABM is employed by ATS divisions globally and is supported with extensive training in the use
of key problem-solving tools, and applied through various projects to drive continuous improvement. When ATS makes an
acquisition, the ABM is quickly introduced to new companies as a means of supporting cultural and business integration.
Key ABM drivers include:
• Strengthening the core: adopting a customer-first mindset; implementing a robust performance management system;
adhering to eight value drivers; managing using key performance indicators; and leveraging daily management to
measure at the point of impact;
• Delivering growth: aligning with customer success; developing organizational talent; constantly confirming that progress
is being made toward stated goals; and creating annual operating and capital deployment plans for each ATS division;
• Pursuing excellence: deploying specific goals that segment strategies into relevant areas of concentration; and
improving continuously using Kaizen events, problem solving and other continuous improvement initiatives, which
increase performance annually; and
• Pioneering innovation: driving automation market technology leadership; creating innovative platforms and analytics
that benefit customers by reducing complexity, shortening development cycles and improving production efficiencies;
and expanding the reach and scope of ATS’ capabilities for competitive advantage.
21
Business Overview
ATS and its subsidiaries serve customers in the following industrial markets: (a) life sciences, which includes medical
devices, pharmaceuticals, radiopharmaceuticals and chemicals; (b) food & beverage, which includes processing, packaging
and filling for fresh produce and liquid food & beverage; (c) transportation, which includes electric vehicles, automotive and
aerospace; (d) consumer products, which includes warehousing automation, cosmetics, electronics and durable goods;
and, (e) energy, which includes oil & gas, in addition to nuclear, solar, and other green energy applications. With broad and
in-depth knowledge across multiple industries and technical fields, ATS delivers single-source solutions to customers
designed to lower their production costs, accelerate product delivery, and improve quality control. ATS engages with
customers on both greenfield programs, such as equipping new factories, and brownfield programs including capacity
expansions, production relocations, equipment upgrades, software upgrades, efficiency improvements and factory
optimizations. ATS is selective in its choice of markets and favours regulated industries where quality and reliability
are mandatory.
ATS engages at varying points in customers’ automation cycles. During the pre-automation phase, ATS offers comprehensive
services, including discovery and analysis, concept development, simulation and total cost of ownership modelling, all of
which help customers to verify the feasibility of different types of automation, set objectives for factors such as line speed
and yield, assess production processes for manufacturability and calculate the total cost of ownership.
For customers that have decided to proceed with an automation project, ATS offers specialized equipment for specific
applications or industrial markets, as well as automation and integration services, including engineering design, prototyping,
process verification, specification writing, software and manufacturing process controls development, equipment design and
build, standard automation products/platforms, third-party equipment qualification, procurement and integration, automation
system installation, product line commissioning, validation and documentation. Following the installation of custom
automation, ATS may supply duplicate or similar automation systems that leverage engineering design completed in the
original customer program. For customers seeking complex equipment production or build-to-print manufacturing, ATS
provides value engineering, supply-chain management, integration and manufacturing capabilities, and other automation
products and solutions.
Post automation, ATS offers a number of services, including training, process optimization, preventative maintenance,
emergency and on-call support, spare parts, retooling, retrofits and equipment relocation. Service agreements are often
attached at the time of new equipment sale or are available on an after-market basis on installed equipment. The Company
employs service strategies to serve customers and increase the revenue derived from these activities. Its Illuminate™
Manufacturing Intelligence serves as a connected factory floor management system that captures, analyzes and uses
real-time machine performance data to quickly and accurately troubleshoot, deliver process and product solutions, prevent
equipment downtime, drive greater operational efficiency and unlock performance for sustainable production improvements.
Contract values for individual automation systems vary and are often in excess of $1 million, with some contracts for
enterprise-type programs well in excess of $10 million. Due to the custom nature of customer projects, contract durations
vary, with typical durations ranging from six to 12 months, and some larger contracts extending up to 18 to 24 months.
Contracts for pre- and post-automation services range in value and can exceed $1 million with varying durations, which can
sometimes extend over several years.
2 2
MANAGEMENT’S DISCUSSION AND ANALYSIS Competitive strengths
Management believes ATS has the following competitive strengths:
Global presence, size and critical mass: ATS’ global presence and scale provide advantages in serving multinational
customers, as many of the Company’s competitors are smaller and operate with a narrower geographic and/or industrial
market focus. ATS and its subsidiaries have locations in Canada, the United States, Italy, Germany, Belgium, Thailand,
United Kingdom, Netherlands, Czech Republic, China, Slovakia, Ireland, India, Singapore, Mexico, Spain, France, Ukraine,
Malaysia, Brazil, Switzerland and Austria. ATS can deliver localized service through its network of over 75 locations globally.
Management believes that ATS’ scale and global footprint provide it with competitive advantages in winning large,
multinational customer programs and in delivering a lifecycle-oriented service platform to customers’ global operations. In
addition, customers seeking to de-risk or enhance the resiliency of their supply chains also provide future opportunities for
ATS to pursue by leveraging its global presence and the inherent advantages of automation on production reliability and cost.
Technical skills, capabilities and experience: ATS has designed, manufactured, assembled and serviced over 26,000
automation systems worldwide and has an extensive knowledge base and accumulated design expertise. Management
believes ATS’ broad experience in many different industrial markets and with diverse technologies, its talented workforce,
which includes over 2,000 engineers and over 400 program management personnel, and its ability to provide custom
automation, repeat automation, automation products and value-added services, position the Company well to serve complex
customer programs in a variety of markets.
Product and technology portfolio: By bringing thousands of unique automation projects to market, ATS owns an extensive
product and technology portfolio. ATS has a number of standard automation platforms and products, including: innovative
linear motion transport systems; pallet handling and sanitary conveyance systems; robust cam-driven assembly platforms;
advanced vision systems used to ensure product or process quality; optical sorting and inspection technologies; test
systems; factory management and intelligence and other software solutions; proprietary weighing hardware and process
control software technologies; precision fluid-dispensing equipment; aseptic containment technologies; biopharma
processing equipment and high-performance tube filling and cartoning systems. Management believes the Company’s
extensive product and technology portfolio provides advantages in developing unique and leading solutions for customers
and in maintaining competitiveness.
Recognized brands: Management believes ATS is well known within the global automation industry due to its long history of
innovation and broad scope of operations. In addition, ATS’ subsidiaries include several strong brands, such as: “SP”, a
specialized designer and manufacturer of pharmaceutical and packaging equipment and systems in the life sciences market;
“NCC”, a provider of engineered-to-order sanitary automation solutions and stand-alone precision conveyance equipment in
the food & beverage industries; “BioDot”, a leading manufacturer of automated fluid-dispensing systems in the life sciences
market; “CFT”, a specialist in the development and production of turn-key machines and systems for the food & beverage
industries; “IWK”, a specialist in the packaging market; “Process Automation Solutions”, a provider of innovative automation
solutions for process and production sectors; “Comecer”, a provider of high-tech automation systems for nuclear medicine
and pharmaceutical industries; and “MARCO”, a provider of yield control and recipe formulation systems in the food,
nutraceuticals and cosmetics sectors. Management believes that ATS’ brands and global reputation improve sales
prospecting, allowing the Company to be considered for a wide variety of customer programs.
Trusted customer relationships: ATS serves some of the world’s largest multinational companies. Most customer
relationships are long-standing, often spanning a decade or more, and many customers return to ATS and its subsidiaries
time after time to meet their automation manufacturing, assembly, processing, and services needs.
Total-solutions capabilities: Management believes the Company gains competitive advantages because it often provides total
turnkey solutions in automation. This allows customers to single source their most complex projects to ATS rather than rely
on multiple engineering firms, equipment builders and/or service/component suppliers. In addition, ATS provides customers
with other value-added services including pre-automation consulting, total cost-of-ownership studies, lifecycle material
management, and post-automation service, training and support.
23
ATS AUTOMATION /// ANNUAL REPORT 2022 Financial Highlights
(In millions of dollars, except per share and margin data)
Revenues
Net income
Adjusted earnings from
operations1
Adjusted earnings from
operations margin1
Adjusted EBITDA1
Adjusted EBITDA margin1
Basic earnings per share
Adjusted basic earnings
per share1
Order Bookings1
$
$
$
$
$
$
$
As at
Order Backlog1
Q4 2022
Q4 2021
Variance
Fiscal 2022
Fiscal 2021
Variance
603.2
39.9
85.8
$
$
$
399.9
50.8%
23.8
67.6%
49.5
73.3%
$
$
$
2,182.7
121.4
292.4
$
$
$
1,430.0
52.6%
64.1
89.4%
163.2
79.2%
14.2%
12.4%
183 bps
13.4%
11.4%
198 bps
99.1
$
58.8
68.5%
$
343.9
$
200.7
71.4%
16.4%
14.7%
173 bps
15.8%
14.0%
172bps
0.43
0.64
$
$
0.26
65.4%
0.34
88.2%
$
$
1.32
2.17
$
$
0.70
88.6%
1.07
102.8%
638.0
$
463.0
37.8%
$
2,456.0
$
1,626.0
51.0%
March 31,
2022
March 31,
2021
Variance
$
1,438
$
1,160
24.0%
1 Non-IFRS financial measure. See “Non-IFRS and Other Financial Measures.”
Executive Summary: Growth Organically and from Acquisitions
• Fourth quarter revenues increased 50.8% or $203.3 million year over year, reflecting $172.1 million from strategic
acquisitions and $41.8 million of organic revenue primarily within the life sciences market (excluding foreign exchange
translation changes). (Organic revenue is a non-IFRS financial measure; see “Non-IFRS and Other Financial
Measures”.)
• Fourth quarter net income grew 67.6% or $16.1 million year over year reflecting growth in revenues.
• Growth in Order Bookings in the fourth quarter primarily reflected contributions from acquired companies while annual
Order Bookings included contributions from both acquisitions and strong organic growth across all industrial markets.
• Order Backlog of $1,438 million at year-end provides good revenue visibility in the short run, is distributed across
diversified, regulated industries where quality and reliability are highly valued, and positions ATS well in an uncertain
economic environment.
• The balance sheet remained strong with cash on hand of $135.3 million and a net debt to adjusted EBITDA ratio of
2.8 times, despite capital deployment for seven strategic acquisitions totalling $798.1 million in Fiscal 2022. (Net
debt to adjusted EBITDA is a non-IFRS ratio; see “Non-IFRS and Other Financial Measures”.)
• ATS teams have met the ongoing challenges caused by the COVID-19 pandemic and the geopolitical environment while
growing the Company’s capabilities, market presence and new customer relationships. The Company has continued to
achieve strong customer loyalty through repeat orders.
For further discussion on the quarterly and year to date results, see “Consolidated Results”.
2 4
MANAGEMENT’S DISCUSSION AND ANALYSIS
Strategic Business Acquisitions
In executing its strategy, in fiscal 2022 the Company completed the following acquisitions:
Acquisition and Date
Profile
Purpose
BioDot, Inc. (“BioDot”)
June 1, 2021
(Q1 FY22)
Leading manufacturer of
automated fluid dispensing
systems for point of care and
clinical diagnostic labs
Expand life sciences
capabilities in precise, low
volume fluid dispensing
NCC Automated
Systems, Inc. (“NCC”)
September 1, 2021
(Q2 FY22)
Provider of engineered to
order sanitary automation
solutions and stand-alone
precision conveyance
systems
Enhance position in food &
beverage end market
SP Industries, Inc.
(“SP”)
December 3, 2021
(Q3 FY22)
Designer and manufacturer
of high-grade biopharma
processing equipment, life
sciences equipment, and lab
apparatus products
Expand life sciences
capabilities in research and
commercial lyophilizers,
aseptic fill-finish equipment
and systems, provide
meaningful recurring
revenues through its labware
and glassware business
Consideration/
Accounting Method1
$107.1 million
(U.S. $88.7 million);
business combination/
purchase method
$56.9 million (U.S.
$45.1 million), $56.0 million
paid in Q2 FY 22 excluding
cash acquired of $6.3 million
(balance based on fair value
earn-out paid within 2 fiscal
years if performance targets
met); business combination/
purchase method
$583.9 million
(U.S. $454.9 million);
business combination/
purchase method
1 The consideration amount at the time of acquisition has been converted to Canadian dollars using the exchange rate at the date of acquisition.
Other acquisitions
On June 2, 2021, the Company acquired Control and Information Management Ltd. (“CIM”), an industrial automation system
integrator based in Ireland. With the acquisition of CIM, the Company added to its automation and service capabilities for
biopharma, pharmaceutical, and other manufacturing and services industries and enhanced its digitization strategy.
On August 6, 2021, the Company acquired BLSG AG (“BLSG”), a consulting company specializing in process engineering and
operational excellence. The acquisition of BLSG expanded the Company’s Process Automation Solutions (“PA”) business’
ability to holistically serve customers from problem identification to solution implementation.
On November 30, 2021, the Company acquired DF S.r.l. (“DF”), a specialized manufacturer of pharmaceutical processing
and packaging equipment and systems. The acquisition of DF complements the Company’s Comecer business and
enhances its value proposition to customers, particularly in aseptic fill-finish manufacturing.
On December 30, 2021, the Company acquired HSG Engineering S.r.l. (“HSG”) an Italian-based industrial automation system
integrator primarily serving the pharmaceutical sector. HSG joined ATS’ PA business, and strengthens its regional presence
in Italy and deepens its domain knowledge in the biopharma and pharmaceutical sectors.
Total purchase price for these four acquisitions was $52.0 million and cash consideration paid in fiscal 2022 for these
four acquisitions was $38.2 million. The balance of the purchase price is comprised of contingent consideration of up to
$1.8 million payable if certain performance targets are met within a year of acquisition date, $6.4 million to be paid upon
finalization of working capital and $5.6 million of deferred consideration to be paid within 48 months of the acquisition date.
These acquisitions were accounted for as business combinations with the Company as the acquirer. The purchase method
of accounting was used.
25
ATS AUTOMATION /// ANNUAL REPORT 2022 Order Bookings by Quarter
(In millions of dollars)
Q1
Q2
Q3
Q4
Total Order Bookings
Fiscal 2022
Fiscal 2021
$
$
637
510
671
638
325
403
435
463
$
2,456
$
1,626
Fourth quarter fiscal 2022 Order Bookings were $638 million, a 37.8% year-over-year increase. This reflected organic growth
of 1.0% and 39.5% growth from acquired companies, partially offset by a 2.7% decrease due to foreign exchange rate
translation of Order Bookings by ATS’ global subsidiaries, primarily reflecting the strengthening of the Canadian dollar relative
to the Euro. Growth in Order Bookings from acquired companies totalled $182 million, of which CFT contributed $81 million
and SP contributed $66 million. By market, Order Bookings in life sciences increased due to the addition of SP. Order
Bookings in food & beverage increased due to the addition of CFT. Order Bookings in consumer products increased due to
the combination of acquired companies and the timing of customer projects. Organic growth was offset by lower Order
Bookings in transportation compared to a year ago, when the Company secured a large EV program, and lower Order
Bookings in energy due to timing of customer projects.
Fiscal 2022 Order Bookings were $2,456 million. The 51.0% increase reflected organic growth of 21.0% and 34.4% from
acquired companies, partially offset by a 4.4% decrease due to foreign exchange rate translation, primarily reflecting the
strengthening of the Canadian dollar relative to the U.S. dollar and Euro. Growth in Order Bookings from acquired companies
totalled $559 million, of which CFT contributed $378 million and SP contributed $80 million. By market, Order Bookings
in life sciences increased due to a combination of a $120 million Order Booking from a global medical device company
for a fully automated manufacturing solution secured in the first quarter of fiscal 2022 and contributions from acquired
companies. Order Bookings in food & beverage increased due primarily to the addition of CFT. Order Bookings in
transportation increased due to multiple large EV program awards and timing of customer orders. Order Bookings in
consumer products increased due to large customer project awards and through acquisitions, with SP contributing
$26 million of consumer products bookings. Order Bookings in energy increased due to timing of customer projects,
primarily in the nuclear market.
The book-to-bill ratio for fiscal 2022 was 1.13:1, compared to 1.14:1 in the corresponding period a year ago. Book-to-bill
ratio is a supplementary financial measure; see “Non-IFRS and Other Financial Measures.”
Order Backlog Continuity
(In millions of dollars)
Opening Order Backlog
$
1,475
$
985
$
1,160
$
942
Q4 2022
Q4 2021
Fiscal 2022
Fiscal 2021
Revenues
Order Bookings
Order Backlog adjustments1
Total
(603)
638
(72)
(400)
463
112
(2,183)
2,456
5
(1,430)
1,626
22
$
1,438
$
1,160
$
1,438
$
1,160
1 Order Backlog adjustments include incremental Order Backlog of acquired companies ($104 million SP, $13 million NCC and $24 million BioDot
included in fiscal 2022), foreign exchange adjustments, scope changes and cancellations.
2 6
MANAGEMENT’S DISCUSSION AND ANALYSIS Outlook
Order Backlog by Market
(In millions of dollars)
As at
Life Sciences
Food & Beverage
Transportation
Consumer Products
Energy
Total
March 31, 2022
March 31, 2021
$
734
183
208
211
102
$
585
169
197
113
96
$
1,438
$
1,160
At March 31, 2022, Order Backlog was $1,438 million, 24.0% higher than at March 31, 2021. Order Backlog growth was
primarily driven by higher Order Bookings in fiscal 2022 in all end markets, and Order Backlog from acquired businesses.
The Company’s funnel (which includes customer requests for proposal and ATS-identified customer opportunities) remains
significant; however, as pandemic restrictions have eased in some geographies, persistent supply constraint pressures and
inflation contribute to a fluid and uncertain operating environment. These factors may impact the timing to convert
opportunities into Order Bookings and may present increased pressure on future results.
By market, the life sciences funnel remains robust as a result of strong activity in medical devices, pharmaceuticals and
radiopharmaceuticals. Funnel activity in food & beverage is robust and with the addition of CFT, the Company has enhanced
its exposure to opportunities in this market. In transportation, the funnel largely includes strategic opportunities related to
electric vehicles, a growing market. Funnel activity in energy is stable and comprised of some opportunities being developed
over the longer-term. Funnel activity in consumer products has improved; however, management expects some customers to
remain cautious in deploying capital in the current economic environment. Funnel growth in markets where environmental,
social and governance (“ESG”) requirements are an increasing focus for customers, including grid battery storage, electric
vehicle (“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 also provide future opportunities for ATS to pursue.
Order Backlog of $1,438 million is expected to 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. In the first quarter of fiscal 2023, management
expects the conversion of Order Backlog to revenues to be in the lower end of the 40% to 45% range. This estimate was
calculated based on the combination of management’s estimate of current projects in Order Backlog and expectations for
revenues that will be booked and recognized within the period.
The timing of customer decisions on larger opportunities is expected to cause variability in Order Bookings from quarter to
quarter and lengthen the performance period and revenue recognition for certain customer programs. 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 can 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 cycles of the Company’s customers.
27
ATS AUTOMATION /// ANNUAL REPORT 2022 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 from 13.4% in fiscal 2022 (2021 – 11.4%). 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 businesses acquired over the last year, and expects to realize cost and revenue
synergies consistent with announced integration plans.
In the short term, the global COVID-19 pandemic has disrupted global supply chains, leading to longer lead times and cost
increases on certain raw materials and components used by the Company. To date the Company has largely mitigated these
supply chain disruptions through the use of alternative supply sources and savings on materials not affected by cost
increases. However, 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. Achieving management’s margin target assumes that the
Company will successfully implement the initiatives noted above, and that such initiatives will result in improvements to its
adjusted earnings from operations margin (see “Note to Readers: Forward-Looking Statements” for a description of the risks
underlying the achievement of the margin target in future periods).
COVID-19 resulted in governments worldwide enacting emergency measures to combat the spread of the virus beginning in
March 2020 (just prior to the Company’s fiscal 2021 year). These measures, which included the implementation of travel
restrictions, quarantine periods and physical distancing requirements affected economies and disrupted business operations
for ATS and its customers. While vaccination programs are underway and generally restrictions are easing across most
countries, there is ongoing concern and uncertainty regarding potential new variants. As a result, it remains difficult to
predict the duration or severity of the pandemic or its effect on the business, financial results and conditions of the
Company. Furthermore, depending on the duration and severity of the COVID-19 pandemic, it may also have the effect of
heightening many of the other business risks such as risks relating to the Company’s supply chain (availability and cost of
raw materials and components) and the successful on-time completion of customer contracts.
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 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
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.”
2 8
MANAGEMENT’S DISCUSSION AND ANALYSIS Detailed Analysis
Consolidated Results
(In millions of dollars, except per share data)
Revenues
Cost of revenues
Selling, general and administrative
Restructuring costs
Stock-based compensation
Earnings from operations
Net finance costs
Provision for income taxes
Net income
Basic earnings per share
Diluted earnings per share
Total assets
Total cash and short-term investments
Total debt
Other non-current liabilities
Q4 2022
Q4 2021
Fiscal 2022
Fiscal 2021
Fiscal 2020
$
603.2
$
399.9
$
2,182.7
$
1,430.0
$
1,429.7
430.0
110.7
1.9
0.8
59.8
9.6
10.3
39.9
0.43
0.43
$
$
$
$
$
288.8
61.5
–
6.8
42.8
16.7
2.3
23.8
0.26
0.26
$
$
$
$
$
1,570.3
1,045.8
1,067.6
387.1
5.9
32.8
186.6
32.2
33.0
121.4
1.32
1.31
3,069.4
135.3
1,101.3
159.2
$
$
$
$
$
$
$
$
$
236.0
14.3
14.3
119.6
40.1
15.4
64.1
0.70
0.69
2,201.8
187.5
504.8
139.4
$
$
$
$
$
$
$
$
$
233.7
26.6
6.2
95.6
28.1
14.6
52.9
0.57
0.57
2,098.0
358.6
665.6
121.1
$
$
$
$
$
$
$
$
$
Non-IFRS Financial Measures1
Q4 2022
Q4 2021
Fiscal 2022
Fiscal 2021
Adjusted earnings from operations
EBITDA
Adjusted EBITDA
Adjusted earnings per share
$
$
$
$
85.8
92.3
99.1
0.64
$
$
$
$
49.5
60.2
58.8
0.34
1 Non-IFRS financial measures. See “Non-IFRS and Other Financial Measures.”
$
$
$
$
292.4
302.0
343.9
2.17
$
$
$
$
163.2
190.6
200.7
1.07
29
ATS AUTOMATION /// ANNUAL REPORT 2022 Consolidated Revenues
(In millions of dollars)
Revenues by type
Q4 2022
Q4 2021
Fiscal 2022
Fiscal 2021
Revenues from construction contracts
$
355.6
$
258.1
$
1,359.7
$
895.1
Services rendered
Sale of goods
Total revenues
Revenues by market
Life Sciences
Food & Beverage
Transportation
Consumer Products
Energy
Total revenues
Revenues by customer location
North America
Europe
Asia/Other
Total revenues
Fourth quarter
$
$
$
$
136.3
111.3
109.7
32.1
485.7
337.3
413.3
121.6
603.2
$
399.9
$
2,182.7
$
1,430.0
Q4 2022
Q4 2021
Fiscal 2022
Fiscal 2021
320.3
$
228.7
$
1,113.0
$
805.4
95.2
78.6
82.9
26.2
9.8
67.3
60.1
34.0
395.0
293.8
269.0
111.9
35.0
272.3
203.2
114.1
603.2
$
399.9
$
2,182.7
$
1,430.0
Q4 2022
Q4 2021
Fiscal 2022
Fiscal 2021
333.3
$
198.5
$
1,114.3
$
687.6
207.3
62.6
140.3
61.1
822.9
245.5
567.8
174.6
$
603.2
$
399.9
$
2,182.7
$
1,430.0
Fiscal 2022 fourth quarter revenues were 50.8% or $203.3 million higher than in the corresponding period a year ago and
included $172.1 million of revenues earned by acquired companies, most notably $80.2 million from CFT and $59.4 million
from SP. Organic revenue growth, excluding contributions from acquired companies and the impact of foreign exchange rate
changes, was $41.8 million, or 10.5% higher than the fourth quarter of fiscal 2021. Foreign exchange translation negatively
impacted revenues by $10.6 million or 2.7%, primarily reflecting the strengthening of the Canadian dollar relative to the
Euro. Life sciences were the primary source of organic revenue growth and reflected increased activity on medical device
and pharmaceutical projects. Revenues generated from construction contracts increased 37.8% or $97.5 million due to a
combination of revenues earned by acquired companies of $72.0 million (primarily $53.0 million from CFT), and organic
revenue growth. Revenues from services increased 24.2% or $26.6 million primarily due to revenues earned by acquired
companies of $20.7 million. Organic growth in services accounted for $11.1 million of the year-over-year increase and
reflected the Company’s after-sales service initiatives. Foreign exchange translation negatively impacted service revenues by
$5.2 million. Revenues from the sale of goods increased 246.7% or $79.2 million due to revenues earned by acquired
companies, primarily CFT and SP, which generate a higher percentage of their revenues from product sales. Organic revenue
and organic revenue growth are non-IFRS measures. Please see “Non-IFRS and Other Financial Measures.”
By market, fourth quarter revenues generated in life sciences increased $91.6 million or 40.1% year over year. This growth
reflected higher Order Backlog entering the fourth quarter of fiscal 2022 compared to the corresponding period in the prior
year, and included $62.1 million of revenues earned by newly acquired companies, primarily SP with a $40.7 million revenue
contribution. Revenues generated in food & beverage increased $85.4 million or 871.4%, primarily due to the acquisition of
CFT which generated $79.9 million of revenues in the fourth quarter of fiscal 2022. Revenues in transportation increased
$11.3 million or 16.8% on higher Order Backlog entering the fourth quarter of fiscal 2022. Revenues generated in consumer
products increased $22.8 million or 37.9% on higher Order Backlog entering the fourth quarter of fiscal 2022. Revenues in
energy decreased $7.8 million or 22.9% due to project timing.
3 0
MANAGEMENT’S DISCUSSION AND ANALYSIS Full year
Revenues for fiscal 2022 were 52.6% or $752.7 million higher than a year ago and included $521.7 million of revenues
earned by acquired companies, most notably $350.8 million from CFT. Organic revenue growth, excluding contributions from
acquired companies and the impact of foreign exchange fluctuations, was $291.9 million or 20.4% higher than the prior year.
Organic revenue growth primarily related to activity in life sciences and was driven by medical device and pharmaceutical
projects. Foreign exchange negatively impacted revenues by $60.9 million or 4.3%, primarily reflecting the strengthening of the
Canadian dollar relative to the U.S. dollar and Euro. Annual revenues generated from construction contracts increased 51.9%
or $464.6 million due to revenues generated by acquired companies totalling $267.0 million (primarily $233.4 million from
CFT), combined with organic revenue growth. Revenues from services increased 17.5% or $72.4 million primarily due to
revenues earned by acquired companies of $54.5 million, combined with organic revenue growth. Organic growth was
supported by improved customer site access and reduced pandemic travel restrictions compared to fiscal 2021. Revenues
from the sale of goods increased 177.4% or $215.7 million due to $199.8 million of product and spare parts sales earned by
acquired companies – primarily CFT, BioDot and SP, which generate a higher percentage of their revenues from product sales.
By market, fiscal 2022 revenues from life sciences increased $307.6 million or 38.2% on higher Order Backlog entering
fiscal 2022 and $125.1 million of revenues earned by acquired companies, primarily BioDot and SP. Revenues generated
in food & beverage increased $360.0 million or 1,028.6%, primarily due to the acquisition of CFT, which generated
$350.8 million of revenues in fiscal 2022. Revenues in transportation increased $21.5 million or 7.9% due to project timing.
Revenues generated in consumer products increased $65.8 million or 32.4% on higher Order Backlog entering the fiscal
year and $35.1 million from acquired companies, primarily SP and NCC. Revenues in energy decreased $2.2 million or 1.9%
due to project timing and lower Order Backlog entering the fiscal year.
Cost of revenues. At $430.0 million, fourth quarter fiscal 2022 cost of revenues increased by $141.2 million or 48.9%
compared to the corresponding period a year ago due to higher revenues. Fourth quarter fiscal 2022 cost of revenues
included acquisition-related inventory fair value charges totalling $5.2 million. Excluding these charges, the cost of revenues
was $424.8 million in the fourth quarter of fiscal 2022. Fourth quarter fiscal 2022 gross margin was 28.7% (excluding
acquisition-related inventory fair value charges, gross margin was 29.6%), compared to 27.8% in the corresponding period a
year ago. The year-over-year improvement was due to efficiency gains realized in the Company’s cost structure as a result of
previously implemented reorganization plans, improved program execution, increased revenues from after-sales services as
well as a reduction in travel and entry restrictions at customer sites related to COVID-19 compared to a year ago. Annual
gross margin was 28.1% (excluding acquisition-related inventory fair value charges of $25.6 million, gross margin was
29.2%) compared to 26.9% in the prior year. The year-over-year improvement was due primarily to efficiency gains made in
the Company’s cost structure as a result of previously implemented reorganization plans, improved program execution, and
increased revenues from after-sales services, partially offset by $9.7 million lower recoveries under the Canada Emergency
Wage Subsidy (“CEWS”) program.
Selling, general and administrative (“SG&A”) expenses. SG&A expenses for the fourth quarter of fiscal 2022 were
$110.7 million and included $19.2 million of costs related to the amortization of identifiable intangible assets on business
acquisitions, $1.4 million of incremental costs related to the Company’s acquisition activity and $1.7 million in adjustments
to contingent consideration and post-acquisition remuneration related to the acquisition of MARCO. Excluding these items,
SG&A expenses were $91.8 million in the fourth quarter of fiscal 2022. Comparably, SG&A expenses for the fourth quarter
of fiscal 2021 were $54.8 million, which excluded $8.1 million of costs related to the amortization of identifiable intangible
assets on business acquisitions, $4.2 million of incremental costs related to the Company’s acquisition activity and
$5.6 million in adjustments to contingent consideration and post-acquisition remuneration related to the acquisition of
MARCO. Higher SG&A expenses in the fourth quarter of fiscal 2022 primarily reflected the addition of SG&A expenses from
acquired companies of $32.9 million, largely related to CFT and SP.
31
ATS AUTOMATION /// ANNUAL REPORT 2022 For fiscal 2022, SG&A expenses were $387.1 million, which included $63.9 million of costs related to the amortization of
identifiable intangible assets on business acquisitions, $12.0 million of incremental costs related to the Company’s
acquisition activity and $1.7 million in adjustments to contingent consideration and post-acquisition remuneration related to
the acquisition of MARCO. Excluding these costs, annual SG&A expenses were $312.9 million. Comparably, SG&A expenses
for fiscal 2021 were $206.7 million, which excluded $33.5 million of expenses related to the amortization of identifiable
intangible assets on business acquisitions, $6.7 million of incremental costs related to the Company’s acquisition activity,
$5.6 million in adjustments to contingent consideration and post-acquisition remuneration related to the acquisition of
MARCO, and a $5.3 million gain on the sale of a facility. Higher SG&A expenses for fiscal 2022 primarily reflected the SG&A
expenses of acquired companies of $100.1 million, including CFT SG&A of $67.0 million.
Restructuring costs. Restructuring costs for the fourth quarter of fiscal 2022 were $1.9 million and primarily related to the
consolidation of an SP facility. Restructuring costs for fiscal 2022 were $5.9 million and related primarily to the closure of
two underperforming CFT facilities intended to bring focus to areas with a stronger value proposition, in addition to the SP
facility consolidation. There were $14.3 million restructuring costs in fiscal 2021 for the closure of facilities and workforce
reductions primarily in low-growth transportation markets in Europe and Asia.
Stock-based compensation. Stock-based compensation expense was $0.8 million in the fourth quarter of fiscal 2022
compared to $6.8 million in the corresponding period a year ago. The decrease in stock-based compensation costs is
attributable to lower expenses from the revaluation of deferred stock units and restricted share units based on the
market price of the Company’s shares, which decreased to $45.10 per share at closing on March 31, 2022 compared
to $50.76 per share at closing on December 24, 2021. For fiscal 2022, stock-based compensation expense was
$32.8 million, compared to $14.3 million a year earlier.
Earnings and Adjusted Earnings from Operations
(In millions of dollars)
Earnings from operations
$
Amortization of acquisition-related intangible assets
Acquisition-related transaction costs
Acquisition-related inventory fair value charges
Gain on sale of facility
Contingent consideration adjustment
Restructuring charges
Q4 2022
Q4 2021
Fiscal 2022
Fiscal 2021
59.8
19.2
1.4
5.2
–
(1.7)
1.9
$
42.8
$
186.6
$
119.6
8.1
4.2
–
–
(5.6)
–
63.9
12.0
25.7
–
(1.7)
5.9
33.5
6.7
–
(5.3)
(5.6)
14.3
Adjusted earnings from operations1
$
85.8
$
49.5
$
292.4
$
163.2
1 Non-IFRS financial measure. See “Non-IFRS and Other Financial Measures.”
Fourth quarter
Fiscal 2022 fourth quarter earnings from operations were $59.8 million (9.9% operating margin) compared to $42.8 million
(10.7% operating margin) in the fourth quarter a year ago. Fiscal 2022 earnings from operations included $19.2 million
related to amortization of acquisition-related intangible assets, $1.4 million of incremental costs related to the Company’s
acquisition activity and $1.7 million in adjustments to contingent consideration related to the acquisition of MARCO
recorded to SG&A expenses, $5.2 million of acquisition-related inventory fair value charges recorded to cost of revenues
and $1.9 million of restructuring costs. Fiscal 2021 fourth quarter earnings from operations included $8.1 million of
amortization of acquisition-related intangible assets, $4.2 million of incremental costs related to the Company’s acquisition
activity, and $5.6 million in adjustments to contingent consideration related to the acquisition of MARCO.
3 2
MANAGEMENT’S DISCUSSION AND ANALYSIS Excluding these items in both quarters, adjusted earnings from operations were $85.8 million (14.2% margin), compared to
$49.5 million (12.4% margin) a year ago. Contributions from acquired companies were $13.3 million, with SP contributing
$8.5 million and BioDot contributing $4.3 million. Fourth quarter fiscal 2022 adjusted earnings from operations reflected
higher gross margin due to efficiency gains made in the Company’s cost structure resulting from previously implemented
reorganizations, improved program execution, increased revenues from after-sales services, as well as a reduction in
COVID-19 travel, entry restrictions and temporary closures at customer sites compared to a year ago.
Full year
For fiscal 2022, earnings from operations were $186.6 million (8.5% operating margin), compared to $119.6 million
(8.4% operating margin) in the corresponding period a year ago. Earnings from operations included: $63.9 million related to
amortization of acquisition-related intangible assets, $12.0 million of incremental costs related to the Company’s acquisition
activity and $1.7 million in adjustments to contingent consideration related to the acquisition of MARCO recorded in SG&A
expenses, $25.7 million of acquisition-related inventory fair value charges recorded in cost of revenues and $5.9 million of
restructuring costs consistent with the integration plan for CFT. Fiscal 2021 earnings from operations included $33.5 million
related to amortization of acquisition-related intangible assets, $6.7 million of incremental costs related to the Company’s
acquisition activity, a $5.3 million gain related to the sale of a facility, $5.6 million in adjustments to contingent
consideration related to the acquisition of MARCO recorded in SG&A expenses and $14.3 million of restructuring costs
to mitigate an expected slowdown in certain areas of the transportation market.
Excluding those items in both years, adjusted earnings from operations were $292.4 million (13.4% margin), compared to
$163.2 million (11.4% margin) a year ago. Contributions from acquired companies were $42.7 million, with BioDot, SP and
CFT contributing $22.7 million, $9.4 million and $9.5 million respectively. Higher fiscal 2022 adjusted earnings from
operations reflected higher gross margin due to efficiency gains made in the Company’s cost structure as a result of
previously implemented reorganization plans, improved program execution, and increased revenues from after-sales services.
For fiscal 2022, the Company benefited from CEWS recoveries of $0.6 million compared to $16.2 million a year ago.
Net finance costs. Net finance costs were $9.6 million in the fourth quarter of fiscal 2022, compared to $16.7 million a year
ago. For fiscal 2022, finance costs were $32.2 million compared to $40.1 million in the prior fiscal year. Fiscal 2021 finance
costs included $9.1 million of finance costs associated with the redemption of the U.S. $250.0 million 6.5% senior notes
that were due in 2023.
Income tax provision. For the three- and twelve-months ended March 31, 2022, the Company’s effective income tax rates of
20.5% and 21.4%, respectively, differed from the combined Canadian basic federal and provincial income tax rate of 26.5%
due to income earned in certain jurisdictions with different statutory tax rates.
Net Income. Net income for the fourth quarter of fiscal 2022 was $39.9 million (43 cents per share basic and diluted), a
$16.1 million (or 67.6%) increase compared to $23.8 million (26 cents per share basic and diluted) for the fourth quarter of
fiscal 2021. This primarily reflected an increase in earnings from operations combined with a decrease in net finance costs.
Adjusted basic earnings per share were 64 cents compared to 34 cents in the fourth quarter of fiscal 2021 (see
“Reconciliation of Non-IFRS Measures to IFRS Measures”).
Net income for fiscal 2022 was $121.4 million ($1.32 per share basic and $1.31 per share diluted), a $57.3 million (or
89.4%) increase compared to $64.1 million (70 cents per share basic and 69 cents per share diluted) for the corresponding
period a year ago. The increase was primarily a result of organic revenue growth and improved operating margin as a result
of a previously implemented reorganization, partially offset by a $18.5 million increase in stock-based compensation
expense. Adjusted basic earnings per share were $2.17 in fiscal 2022 compared to $1.07 in the corresponding period a
year ago (see “Reconciliation of Non-IFRS measures to IFRS measures”).
33
ATS AUTOMATION /// ANNUAL REPORT 2022 Other Non-IFRS Measures of Performance
(In millions of dollars)
Q4 2022
Q4 2021
Fiscal 2022
Fiscal 2021
Earnings from operations
Depreciation and amortization
EBITDA1
Restructuring charges
Acquisition-related transaction costs
Acquisition-related inventory fair value charges
Gain on sale of facility
$
$
$
$
59.8
32.5
92.3
1.9
1.4
5.2
–
42.8
17.4
60.2
–
4.2
–
–
Contingent consideration adjustment
(1.7)
(5.6)
$
$
186.6
115.4
302.0
$
$
5.9
12.0
25.7
–
(1.7)
119.6
71.0
190.6
14.3
6.7
–
(5.3)
(5.6)
Adjusted EBITDA1
$
99.1
$
58.8
$
343.9
$
200.7
1 Non-IFRS financial measure. See “Non-IFRS and Other Financial Measures.”
Fourth quarter
Depreciation and amortization expense was $32.5 million in the fourth quarter of fiscal 2022, compared to $17.4 million a
year ago. The increase was primarily due to the addition of identifiable intangible assets recorded on the acquisitions of CFT,
BioDot and SP.
EBITDA was $92.3 million (15.3% EBITDA margin) in the fourth quarter of fiscal 2022 compared to $60.2 million
(15.1% EBITDA margin) in the fourth quarter of fiscal 2021. EBITDA for the fourth quarter of fiscal 2022 included
$1.9 million of restructuring charges, $1.4 million of incremental costs related to the Company’s acquisition activity,
$5.2 million of acquisition-related inventory fair value charges and $1.7 million in adjustments to contingent consideration
on the acquisition of MARCO. EBITDA for the corresponding period in the prior year included $4.2 million of incremental
costs related to the Company’s acquisition activity and $5.6 million in adjustments to contingent consideration on the
acquisition of MARCO. Excluding these costs, adjusted EBITDA was $99.1 million (16.4% adjusted EBITDA margin),
compared to $58.8 million (14.7% adjusted EBITDA margin) a year ago. Higher adjusted EBITDA margin reflected operating
improvements including to the Company’s cost structure and less pronounced pandemic inefficiencies than in the same
period a year ago. EBITDA margin is a non-IFRS ratio; see “Non-IFRS and Other Financial Measures.”
Full year
Depreciation and amortization expense was $115.4 million in fiscal 2022, compared to $71.0 million a year ago, primarily
due to the addition of identifiable intangible assets recorded on the acquisitions of CFT, BioDot and SP.
EBITDA was $302.0 million (13.8% EBITDA margin) in fiscal 2022 compared to $190.6 million (13.3% EBITDA margin) a
year ago. EBITDA in fiscal 2022 included $5.9 million of restructuring charges, $12.0 million of incremental costs related
to the Company’s acquisition activity, $25.7 million of acquisition-related inventory fair value charges and $1.7 million in
adjustments to contingent consideration on the acquisition of MARCO. Prior-year EBITDA included $14.3 million of
restructuring charges, $6.7 million of incremental costs related to the Company’s acquisition activity, a $5.3 million gain
related to the sale of a facility and $5.6 million in adjustments to contingent consideration related to the acquisition of
MARCO. Excluding these costs, adjusted EBITDA was $343.9 million (15.8% adjusted EBITDA margin), compared to
$200.7 million (14.0% adjusted EBITDA margin) a year ago. Higher adjusted EBITDA margin reflected operating
improvements including to the Company’s cost structure as a result of a previously implemented reorganization and less
pronounced pandemic inefficiencies than a year ago.
3 4
MANAGEMENT’S DISCUSSION AND ANALYSIS
Share Data
During fiscal 2022, 190,621 stock options were exercised. At May 18, 2022 the total number of ATS common shares
(“Common Shares”) outstanding was 91,918,444 and there were 890,408 stock options outstanding to acquire
Common Shares.
Normal Course Issuer Bid
On December 13, 2021, the Company announced that the Toronto Stock Exchange (“TSX”) had accepted a notice filed by
the Company of its intention to make a normal course issuer bid (“NCIB”). Under the NCIB, ATS may purchase for
cancellation up to a maximum of 7,383,567 Common Shares during the 12-month period ending December 14, 2022.
Some purchases under the NCIB may be made pursuant to an automatic purchase plan between ATS and its broker. This
plan enables the purchase of Common Shares when ATS would not ordinarily be active in the market due to internal trading
blackout periods, insider trading rules, or otherwise. ATS security holders may obtain a copy of the notice, without charge,
upon request from the Secretary of the Company. The NCIB program is viewed by the Company as one component of an
overall capital structure strategy and complementary to its acquisition growth plans.
In fiscal 2022, the Company did not purchase any Common Shares under the NCIB program. At March 31, 2022, a total of
7,383,567 Common Shares remained available for repurchase under the NCIB.
Subsequent to March 31, 2022, during the period April 1, 2022 to May 18, 2022, the Company repurchased 349,280
common shares for cancellation under the NCIB program for $11.4 million.
Investments, Liquidity, Cash Flow and Financial Resources
Investments
(In millions of dollars)
Investments – increase (decrease)
Non-cash operating working capital
Acquisition of property, plant and equipment
Acquisition of intangible assets
Proceeds from disposal of assets
Total cash investments
Fiscal 2022
Fiscal 2021
$
14.3
$
(77.6)
36.3
17.0
(0.8)
$
66.8
$
21.5
10.0
(12.0)
(58.1)
In fiscal 2022, investment in non-cash working capital increased $14.3 million, compared to a decrease of $77.6 million a
year ago. Accounts receivable increased by 21.9%, or $62.7 million, while net contracts in progress increased 106.4%, or
$58.0 million, compared to March 31, 2021, primarily due to the timing of billings in certain customer contracts as well as
acquired businesses, which held $104.2 million of accounts receivable at March 31, 2022. The Company actively manages
its accounts receivable, contract asset and contract liability balances through billing terms on long-term contracts and
collection efforts. Inventories increased 50.7%, or $69.9 million, primarily due to $63.0 million of inventories at March 31,
2022 related to acquired companies. Deposits and prepaid assets increased 123.5% or $46.7 million compared to
March 31, 2021, due to the timing of program execution. Accounts payable and accrued liabilities increased 35.9% or
$132.6 million compared to March 31, 2021. This increased reflected timing of supplier billings and payments as well as
$89.7 million at March 31, 2022 related to acquired businesses. Provisions decreased 14.5% or $4.2 million compared
to March 31, 2021.
35
ATS AUTOMATION /// ANNUAL REPORT 2022 Non-cash working capital as a percentage of revenue was 8.2% at March 31, 2022 compared to 6.2% at March 31, 2021 as
the Company continued to operate well below its upward limit of 15%.
Cash investments in property, plant and equipment totalled $36.3 million in fiscal 2022, primarily related to the expansion
and improvement of certain manufacturing facilities, and investments in computer hardware. Intangible assets expenditures
were $17.0 million in fiscal 2022, primarily related to computer software and various internal development projects. The
results of the total investment in capital expenditures of $53.3 million were in line with our expected range of $50 to
$60 million.
Capital expenditures for fiscal 2023 for tangible assets and indefinite lived intangible assets are expected to be in the
$90 million to $110 million range and reflect the plan to add capacity to support growth while continuing to invest in innovation.
Proceeds from disposal of assets were $0.8 million in fiscal 2022, compared to $12.0 million in fiscal 2021. The decrease
primarily reflected the sale of assets related to the Company’s reorganization activity in fiscal 2021.
The Company performs impairment tests on its goodwill and intangible asset balances on an annual basis or as warranted
by events or circumstances. The Company conducted its annual impairment assessment in the fourth quarter of fiscal 2022
and determined there was no impairment of goodwill or intangible assets as of March 31, 2022 (fiscal 2021 – $nil).
All of the Company’s investments involve risks and require that the Company make judgments and estimates regarding the
likelihood of recovery of the respective costs. In the event management determines that any of the Company’s investments
have become permanently impaired or recovery is no longer reasonably assured, the value of the investment would be
written down to its estimated net realizable value as a charge against earnings.
Liquidity, Cash Flow and Financial Resources
(In millions of dollars, except ratios)
As at
Cash and cash equivalents
Debt-to-equity ratio1
March 31, 2022
March 31, 2021
$
135.3
$
187.5
1.14:1
0.59:1
1 Debt is calculated as bank indebtedness, long-term debt and lease liabilities. Equity is calculated as total equity less accumulated other
comprehensive income.
Cash, beginning of period
$
200.1
$
224.5
$
187.5
$
358.6
Q4 2022
Q4 2021
Fiscal 2022
Fiscal 2021
Total cash provided by (used in):
Operating activities
Investing activities
Financing activities
Net foreign exchange difference
30.0
(1.2)
(90.1)
(3.5)
38.9
(78.1)
6.2
(4.0)
216.2
(797.5)
531.5
(2.4)
185.2
(88.1)
(259.1)
(9.1)
Cash, end of period
$
135.3
$
187.5
$
135.3
$
187.5
At March 31, 2022, the Company had cash and cash equivalents of $135.3 million compared to $187.5 million at
March 31, 2021. At March 31, 2022, the Company’s debt-to-total equity ratio was 1.14:1.
In the fourth quarter of fiscal 2022, cash flows provided by operating activities were $30.0 million (compared to
$38.9 million provided by operating activities in the fourth quarter a year ago). In fiscal 2022, cash flows provided by
operating activities were $216.2 million ($185.2 million provided by operating activities in the corresponding period a year
ago). The variation between the three and twelve months ended March 31, 2022, related primarily to the timing of
investments in non-cash working capital in certain customer programs.
3 6
MANAGEMENT’S DISCUSSION AND ANALYSIS
The free cash flow of the Company for fiscal 2022 was $162.9 million, compared to $153.7 million in the corresponding
period a year ago. Free cash flow is a non-IFRS financial measure; see “Non-IFRS and Other Financial Measures.”
At March 31, 2022, the Company had $228.9 million of unutilized multipurpose credit, including letters of credit, available
under existing credit facilities and an additional $132.7 million available under letter of credit facilities.
On August 12, 2021, the Company amended its senior secured credit facility (the “Credit Facility”) and extended its maturity
to August 29, 2024. The Credit Facility provides a committed revolving credit facility of $750.0 million. The Credit Facility is
secured by the Company’s assets, including a pledge of shares of certain of the Company’s subsidiaries. Certain of the
Company’s subsidiaries also provide guarantees under the Credit Facility. At March 31, 2022, the Company had utilized
$587.7 million under the Credit Facility, of which $587.6 million was classified as long-term debt (March 31, 2021 – $nil)
and $0.1 million by way of letters of credit (March 31, 2021 – $2.2 million).
The Credit Facility is available in Canadian dollars by way of prime rate advances and/or bankers’ acceptances, in U.S.
dollars by way of base rate advances and/or LIBOR advances, in Swiss francs, Euros and British pounds sterling by way of
LIBOR advances, and by way of letters of credit for certain purposes in Canadian dollars, U.S. dollars and Euros. The interest
rates applicable to the Credit Facility are determined based on a net debt-to-EBITDA ratio as defined in the Credit Facility.
For prime rate advances and base rate advances, the interest rate is equal to the bank’s prime rate or the bank’s U.S. dollar
base rate in Canada, respectively, plus a margin ranging from 0.45% to 2.00%. For bankers’ acceptances and LIBOR
advances, the interest rate is equal to the bankers’ acceptance fee or LIBOR, respectively, plus a margin that varies from
1.45% to 3.00%. The Company pays a fee for usage of financial letters of credit that ranges from 0.97% to 2.00%, and a
fee for usage of non-financial letters of credit that ranges from 0.97% to 2.00%. The Company pays a standby fee on the
unadvanced portions of the amounts available for advance or draw-down under the Credit Facility at rates ranging from
0.29% to 0.60%.
The Credit Facility is subject to financial covenants including a net debt-to-EBITDA test and an interest coverage test. Under
the terms of the Credit Facility, the Company is restricted from encumbering any assets with certain permitted exceptions.
The Credit Facility also limits advances to subsidiaries and partially restricts the Company from repurchasing its Common
Shares and paying dividends. At March 31, 2022, all of the covenants were met.
The Company has additional credit facilities available of $69.1 million (40.1 million Euros, $10.0 million U.S., 30.0 million
Thai Baht and 0.1 million Czech Koruna). The total amount outstanding on these facilities at March 31, 2022 was
$1.9 million, of which $1.8 million was classified as bank indebtedness (March 31, 2021 – $1.1 million) and $0.1 million
was classified as long-term debt (March 31, 2021 – $0.1 million). The interest rates applicable to the credit facilities range
from 0.95% to 5.60% per annum. A portion of the long-term debt is secured by certain assets of the Company.
The Company’s U.S. $350.0 million aggregate principal amount of senior notes (“the Senior Notes”) were issued at par, bear
interest at a rate of 4.125% per annum and mature on December 15, 2028. After December 15, 2023, the Company may
redeem the Senior Notes, in whole at any time or in part from time to time, at specified redemption prices and subject to
certain conditions required by the Senior Notes. If the Company experiences a change of control, the Company may be
required to repurchase the Senior Notes, in whole or in part, at a purchase price equal to 101% of the aggregate principal
amount of the Senior Notes, plus accrued and unpaid interest, if any, to, but not including, the redemption date. The Senior
Notes contain customary covenants that restrict, subject to certain exceptions and thresholds, some of the activities of the
Company and its subsidiaries, including the Company’s ability to dispose of assets, incur additional debt, pay dividends,
create liens, make investments, and engage in specified transactions with affiliates. At March 31, 2022, all of the covenants
were met. Subject to certain exceptions, the Senior Notes are guaranteed by each of the subsidiaries of the Company that is
a borrower or has guaranteed obligations under the Credit Facility. Transaction fees of $8.1 million were deferred and are
being amortized over the term of the Senior Notes.
37
ATS AUTOMATION /// ANNUAL REPORT 2022 Contractual Obligations
(In millions of dollars)
The Company’s contractual obligations are as follows as at March 31, 2022:
Total
<1 Year
1-2 Years
2-3 Years
3-4 Years
4-5 Years
>5 Years
Payments Due by Period
Bank indebtedness
$
1.8
$
1.8
$
–
$
–
$
–
$
–
$
–
Long-term debt obligations1
1,151.9
Lease liability obligations1
Purchase obligations
Accounts payable and
accrued liabilities
93.7
408.6
18.1
22.8
399.6
605.8
19.3
7.6
18.1
16.5
0.7
18.1
11.2
0.6
18.1
9.1
0.1
501.5
501.5
–
–
–
–
473.7
14.8
–
–
Total
$ 2,157.5
$ 943.8
$ 632.7
$
35.3
$
29.9
$
27.3
$ 488.5
1 Long-term debt obligations and lease liability obligations include principal and interest.
The Company’s off-balance sheet arrangements consist of purchase obligations which consist primarily of commitments for
material purchases, which have been entered into in the normal course of business.
In accordance with industry practice, the Company is liable to customers for obligations relating to contract completion and
timely delivery. In the normal conduct of its operations, the Company may provide letters of credit as security for advances
received from customers pending delivery and contract performance. In addition, the Company provides letters of credit
for post-retirement obligations and may provide letters of credit as security on equipment under lease and on order.
At March 31, 2022, the total value of outstanding letters of credit was approximately $135.9 million (March 31, 2021 –
$154.0 million).
In the normal course of operations, the Company is party to a number of lawsuits, claims and contingencies. Although it is
possible that liabilities may be incurred in instances for which no accruals have been made, the Company does not believe
that the ultimate outcome of these matters will have a material impact on its consolidated statement of financial position.
The Company is exposed to credit risk on derivative financial instruments arising from the potential for counterparties to
default on their contractual obligations to the Company. The Company minimizes this risk by limiting counterparties to major
financial institutions and monitoring their credit worthiness. The Company’s credit exposure to forward foreign exchange
contracts is the current replacement value of contracts that are in a gain position. The Company is also exposed to credit
risk from its customers. Substantially all of the Company’s trade accounts receivable are due from customers in a variety of
industries and, as such, are subject to normal credit risks from their respective industries. The Company regularly monitors
customers for changes in credit risk. The Company does not believe that any single market or geographic region represents
significant credit risk. Credit risk concentration, with respect to trade receivables, is mitigated as the Company primarily
serves large, multinational customers and obtains receivables insurance in certain instances.
Financial Instruments
The Company has various financial instruments including cash and cash equivalents, trade accounts receivable, bank
indebtedness, trade accounts payable and accrued liabilities and long-term debt which are used in the normal course of
business to maintain operations. The Company uses derivative financial instruments to help manage and mitigate various
risks that the business faces.
Risk Management
An interest rate risk exists with financial instruments held by the Company, and is the risk that the fair value or future cash
flows of a financial instrument will fluctuate as a result of changes in market interest rates. The Company manages interest
rate risk on a portfolio basis and seeks financing terms in individual arrangements that are most advantageous taking into
account all relevant factors.
3 8
MANAGEMENT’S DISCUSSION AND ANALYSIS A credit risk exists with financial instruments held by the Company, which is the risk of financial loss if a counterparty to a
financial instrument fails to meet its contractual obligations. The Company attempts to mitigate this risk by following policies
and procedures surrounding accepting work with new customers, and performing work for a large variety of multinational
customers in a number of varying industries.
There is a liquidity risk, which is the risk that the Company may encounter difficulties in meeting obligations associated with
some financial instruments. This is managed by ensuring, to the extent possible, that the Company will have sufficient
liquidity to meet its liabilities when they become due.
Foreign Exchange Risk
The Company is exposed to foreign exchange risk as a result of transactions in currencies other than its functional currency
of the Canadian dollar, through borrowings in currencies other than its functional currency and through investments in its
foreign-based subsidiaries.
The Company’s Canadian operations generate significant revenues in major foreign currencies, primarily U.S. dollars, which
exceed the natural hedge provided by purchases of goods and services in those currencies. In order to manage a portion of
this foreign currency exposure, the Company has entered into forward foreign exchange contracts. The timing and amount of
these forward foreign exchange contract requirements are estimated based on existing customer contracts on hand or
anticipated, current conditions in the Company’s markets and the Company’s past experience. Certain of the Company’s
foreign subsidiaries will also enter forward foreign exchange contracts to hedge identified balance sheet, revenue and
purchase exposures. The Company’s forward foreign exchange contract hedging program is intended to mitigate movements
in currency rates primarily over a four- to six-month period.
The Company uses cross-currency swaps as derivative financial instruments to hedge a portion of its foreign exchange risk
related to its U.S. dollar-denominated Senior Notes. Subsequent to the fourth quarter (on April 20, 2022), the Company
settled its cross-currency interest rate swap instrument outstanding at March 31, 2022 to swap U.S. $175.0 million into
Canadian dollars. The Company received interest of 4.125% U.S. per annum and paid interest of 4.257% Canadian. The
Company also settled a cross-currency interest rate swap instrument to swap 143.9 million Euros into Canadian dollars that
was outstanding on March 31, 2022. The Company received interest of 4.257% Canadian per annum and paid interest of
3.145% Euros. The Company received $17.2 million to settle the cross-currency swaps.
Subsequent to the fourth quarter (on April 20, 2022), the Company entered into a cross-currency interest rate swap
instrument to swap U.S. $175.0 million into Canadian dollars to hedge a portion of its foreign exchange risk related to its
U.S. dollar-denominated Senior Notes. The Company will receive interest of 4.125% U.S. per annum and pay interest of
4.169% Canadian. The terms of the hedging instrument will end on December 15, 2025.
The Company manages foreign exchange risk on its Euro-denominated net investments. The Company uses a cross-currency
interest rate swap as derivative financial instruments to hedge a portion of the foreign exchange risk related to its Euro-
denominated net investment. Subsequent to the fourth quarter (on April 20, 2022), the Company entered into a cross-
currency interest rate swap instrument to swap 161.1 million Euros into Canadian dollars. The Company will receive interest
of 4.169% Canadian per annum and pay interest of 2.169% Euros. The terms of the hedging relationship will end on
December 15, 2025.
In addition, from time to time, the Company may hedge the foreign exchange risk arising from foreign currency debt,
intercompany loans, net investments in foreign-based subsidiaries and committed acquisitions through the use of forward
foreign exchange contracts or other non-derivative financial instruments. The Company uses hedging as a risk management
tool, not to speculate.
Period Average Exchange Rates in Canadian Dollars
Year-end actual exchange rates
Period average exchange rates
March 31,
2022
March 31,
2021
1.250
1.383
1.257
1.473
% change
(0.6)%
(6.1)%
March 31,
2022
March 31,
2021
1.254
1.458
1.322
1.541
% change
(5.1)%
(5.4)%
U.S. dollar
Euro
39
ATS AUTOMATION /// ANNUAL REPORT 2022 Consolidated Quarterly Results
(In millions of dollars, except per share amounts)
Revenues
Earnings from
operations1
Adjusted earnings
from operations2
Net income1
$
$
$
$
Basic and diluted
earnings per share1 $
Adjusted basic
earnings per share1 $
Q4 2022
Q3 2022
Q2 2022
Q1 2022
Q4 2021
Q3 2021
Q2 2021
Q1 2021
603.2 $
546.8 $
522.1 $
510.6 $
399.9 $
369.7 $
335.5 $
324.9
59.8 $
38.2 $
43.7 $
44.9 $
42.8 $
32.3 $
23.4 $
21.1
85.8 $
70.4 $
70.7 $
65.4 $
49.5 $
43.8 $
40.1 $
29.7
39.9 $
23.3 $
29.6 $
28.7 $
23.8 $
18.9 $
11.6 $
9.8
0.43 $
0.25 $
0.32 $
0.31 $
0.26 $
0.20 $
0.13 $
0.11
0.64 $
0.52 $
0.53 $
0.48 $
0.34 $
0.30 $
0.26 $
0.17
Order Bookings3
$
638.0 $
671.0 $
510.0 $
637.0 $
463.0 $
435.0 $
403.0 $
325.0
Order Backlog4
$ 1,438.0 $ 1,475.0 $ 1,295.0 $ 1,248.0 $ 1,160.0 $
985.0 $
956.0 $
909.0
1 Earnings from operations, net income and basic and diluted earnings per share for Q1 and Q2 fiscal 2022 have been re-presented as a result of
measurement period adjustments for the acquisitions of CFT, BioDot and NCC as required by IFRS 3, Business Combinations.
2 Non-IFRS measure. See “Non-IFRS and Other Financial Measures”” and “Reconciliation of Non-IFRS Measures to IFRS Measures.”
3 Non-IFRS measure. See “Non-IFRS and Other Financial Measures” and “Order Bookings by Quarter.”
4 Non-IFRS measure. See “Non-IFRS and Other Financial Measures” and “Order Backlog Continuity.”
Interim financial results are not necessarily indicative of annual or longer-term results because capital equipment markets
served by the Company tend to be cyclical in nature. Operating performance quarter to quarter may also be affected by the
timing of revenue recognition on large programs in Order Backlog, which is impacted by such factors as customer delivery
schedules, the timing of third-party content, and by the timing of acquisitions. General economic trends, product life cycles
and product changes may impact revenues and operating performance. ATS typically experiences some seasonality with its
Order Bookings, revenues and earnings from operations, due to employee vacations, seasonality of growing seasons within
the food industry and summer plant shutdowns by its customers. The COVID-19 pandemic has caused variation within the
life sciences industry in past quarters and is likely to affect quarterly performance patterns in fiscal 2023.
Related Party Transactions
The Company has an agreement with a shareholder, Mason Capital Management, LLC (“Mason Capital”), pursuant to which
Mason Capital has agreed to provide ATS with ongoing strategic and capital markets advisory services for an annual fee of
U.S. $0.5 million. As part of the agreement, Michael Martino, a member of the Company’s Board of Directors who is
associated with Mason Capital has waived any fees to which he may have otherwise been entitled for serving as a member
of the Board of Directors or as a member of any committee of the Board of Directors.
There were no other significant related party transactions in fiscal 2022.
4 0
MANAGEMENT’S DISCUSSION AND ANALYSIS
Reconciliation of Non-IFRS Measures to IFRS Measures
(In millions of dollars, except per share data)
The following tables reconciles adjusted EBITDA and EBITDA to the most directly comparable IFRS measure (net income):
Adjusted EBITDA
Less: restructuring charges
Less: acquisition related-transaction costs
Less: acquisition-related inventory fair value charges
Add: gain on sale of facility
Add: contingent consideration adjustment
EBITDA
Less: depreciation and amortization expense
Earnings from operations
Less: net finance costs
Less: provision for income taxes
Net income
Adjusted EBITDA
Less: restructuring charges
Less: acquisition related-transaction costs
Less: acquisition-related inventory fair value charges
Add: contingent consideration adjustment
EBITDA
Less: depreciation and amortization expense
Earnings from operations
Less: net finance costs
Less: provision for income taxes
Net income
Fiscal 2022
Fiscal 2021
Fiscal 2020
$
343.9
$
200.7
$
195.1
5.9
12.0
25.7
–
(1.7)
302.0
115.4
186.6
32.2
33.0
$
$
14.3
6.7
–
(5.3)
(5.6)
190.6
71.0
119.6
40.1
15.4
$
$
$
$
$
121.4
$
64.1
$
26.6
1.5
–
–
–
167.0
71.4
95.6
28.1
14.6
52.9
Q4 2022
Q4 2021
$
99.1
$
58.8
1.9
1.4
5.2
(1.7)
92.3
32.5
59.8
9.6
10.3
39.9
$
$
$
–
4.2
–
(5.6)
60.2
17.4
42.8
16.7
2.3
23.8
$
$
$
41
ATS AUTOMATION /// ANNUAL REPORT 2022 MANAGEMENT’S DISCUSSION AND ANALYSIS
The following table reconciles 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 March 31, 2022
Three Months Ended March 31, 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)
$ 59.8 $ (9.6) $ (10.3) $ 39.9 $ 0.43
$ 42.8 $ (16.7) $ (2.3) $ 23.8 $ 0.26
Amortization of
acquisition-related
intangibles
Restructuring charges
Acquisition-related fair
value inventory charges
Acquisition-related
transaction costs
Contingent consideration
adjustment
Adjustment to net finance
costs1
Tax effect adjustments2
19.2
1.9
5.2
1.4
(1.7)
–
–
–
–
–
–
–
–
–
19.2
1.9
0.21
0.02
5.2
0.06
8.1
–
–
1.4
0.02
4.2
(1.7)
(0.02)
(5.6)
–
–
–
–
–
–
–
–
(7.1)
(7.1)
(0.08)
–
–
–
–
–
–
–
9.1
–
–
–
–
–
–
8.1
0.09
–
–
–
–
4.2
0.05
(5.6)
(0.06)
9.1
0.10
–
(8.7)
(8.7)
(0.10)
Adjusted (non-IFRS)
$ 85.8
$ 58.8 $ 0.64
$ 49.5
$ 30.9 $ 0.34
1 Adjustments to net finance costs relate to non-recurring finance costs associated with the redemption of the U.S. $250.0 million 6.5% senior notes that
were due in 2023.
2 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. For the three months ended March 31, 2021, adjustments to provision for income taxes include $4.4 million of
income tax effects on adjustment items that are excluded for the purposes of calculating non-IFRS based adjusted net income, and a non-recurring
provision for income taxes amount of $4.3 million primarily related to the impact of tax planning opportunities which were implemented in the fourth
quarter of fiscal 2021.
4 2
ATS AUTOMATION /// ANNUAL REPORT 2022
Twelve Months Ended March 31, 2022
Twelve Months Ended March 31, 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)
$ 186.6 $ (32.2) $ (33.0) $ 121.4 $ 1.32
$119.6 $ (40.1) $ (15.4) $ 64.1 $ 0.70
Amortization of
acquisition-related
intangibles
Restructuring charges
Acquisition-related fair
value inventory charges
Acquisition-related
transaction costs
Gain on sale of facility
Contingent consideration
adjustment
Adjustment to net finance
costs1
Tax effect adjustments2
63.9
5.9
25.7
12.0
–
(1.7)
–
–
–
–
–
–
–
–
–
–
63.9
5.9
0.69
0.07
33.5
14.3
25.7
0.28
–
12.0
0.13
–
–
6.7
(5.3)
(1.7)
(0.02)
(5.6)
–
–
–
–
–
–
–
–
–
(27.4)
(27.4)
(0.30)
–
–
–
–
–
–
–
–
9.1
–
–
–
–
–
–
–
33.5
0.37
14.3
0.16
–
–
6.7
0.07
(5.3)
(0.06)
(5.6)
(0.06)
9.1
0.10
–
(18.7)
(18.7)
(0.21)
Adjusted (non-IFRS)
$ 292.4
$ 199.8 $ 2.17
$163.2
$ 98.1 $ 1.07
1 Adjustments to net finance costs relate to non-recurring finance costs associated with the redemption of the U.S. $250.0 million 6.5% senior notes that
were due in 2023.
2 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. For fiscal 2021, adjustments to provision for income taxes included $14.4 million of income tax effects on
adjustment items that are excluded for the purposes of calculating non-IFRS based adjusted net income, and a non-recurring provision for income taxes
amount of $4.3 million primarily related to the impact of tax planning opportunities which were implemented in the fourth quarter of fiscal 2021.
43
MANAGEMENT’S DISCUSSION AND ANALYSIS
The following table reconciles organic revenue to the most directly comparable IFRS measure (revenue):
Q4 2022
Q4 2021
Fiscal 2022
Fiscal 2021
Organic revenue
$
441.7
$
402.6
$
1,721.9
$
1,388.0
Revenues of acquired companies
Impact of foreign exchange rate changes
172.1
(10.6)
0.9
(3.6)
521.7
(60.9)
25.3
16.7
Total revenue
Organic revenue growth
$
603.2
$
399.9
$
2,182.7
$
1,430.0
10.5%
20.4%
The following table reconciles non-cash working capital as a percentage of revenues to the most directly comparable IFRS
measures:
As at
Accounts receivable
Income tax receivable
Contract assets
Inventories
Deposits, prepaids and other assets
Accounts payable and accrued liabilities
Income tax payable
Contract liabilities
Provisions
Non-cash working capital
Trailing six-month revenues annualized
Working capital %
March 31, 2022
March 31, 20211
$
348.6
$
285.9
9.0
360.8
207.9
84.5
(501.5)
(48.6)
(248.3)
(24.8)
187.6
2,300.0
8.2%
$
$
8.2
272.8
138.0
37.8
(368.9)
(31.0)
(218.3)
(29.0)
95.5
1,539.2
6.2%
$
$
1 Certain balances as at March 31, 2021 have been re-presented as a result of measurement period adjustments for the acquisition of CFT as required
by IFRS 3, Business Combinations. See the Annual Audited Consolidated Financial Statements for the year ended March 31, 2022.
The following table reconciles net debt to adjusted EBITDA to the most directly comparable IFRS measures:
March 31, 2022
March 31, 2021
$
135.3
$
187.5
(1.8)
(20.0)
(0.0)
(62.9)
$
$
(1,016.7)
(966.1)
343.9
2.8x
(1.1)
(15.2)
(0.1)
(57.8)
(430.6)
(317.3)
200.7
1.6x
$
$
As at
Cash and cash equivalents
Bank indebtedness
Current portion of lease liabilities
Current portion of long-term debt
Long-term lease liabilities
Long-term debt
Net Debt
Adjusted EBITDA (TTM)
Net Debt to Adjusted EBITDA
4 4
ATS AUTOMATION /// ANNUAL REPORT 2022
The following table reconciles free cash flow to the most directly comparable IFRS measures:
Cash flows provided by operating activities
Acquisition of property, plant and equipment
Acquisition of intangible assets
Free cash flow
Q4 2022
Q4 2021
Fiscal 2022
Fiscal 2021
$
$
30.0
$
38.9
$
216.2
$
185.2
(8.4)
(7.9)
(10.4)
(2.6)
(36.3)
(17.0)
(21.5)
(10.0)
13.7
$
25.9
$
162.9
$
153.7
Critical Accounting Estimates and Assumptions
The preparation of the Company’s consolidated financial statements requires management to make estimates, judgments
and assumptions that affect the reported amounts of assets, liabilities, revenues and expenses, and the disclosure of
contingent assets and liabilities at the end of the reporting period. Uncertainty about these estimates, judgments and
assumptions could result in outcomes that require a material adjustment to the carrying amount of the asset or liability
affected in future periods.
The Company based its assumptions on information available when the consolidated financial statements were prepared.
Existing circumstances and assumptions about future developments may change due to market changes or circumstances
arising beyond the control of the Company. Such changes are reflected in the estimates as they occur.
Notes 2 and 3 to the consolidated financial statements describe the basis of accounting and the Company’s significant
accounting policies.
COVID-19
There remains significant uncertainty regarding the extent and duration of the impact of the COVID-19 pandemic on the
Company’s operations. The impact of the pandemic on the Company’s financial condition, cash flows, operations, credit risk,
liquidity and availability of credit is highly uncertain and cannot be predicted. Management will continue to monitor and
assess the impact of the pandemic on its judgments, estimates, accounting policies and amounts recognized in the
consolidated financial statements.
The Company tests for impairment on an annual basis and if there are indicators that impairment may have arisen. In
calculating the recoverable amount for impairment testing, management is required to make several assumptions, including,
but not limited to, expected future revenues, expected future cash flows and forward multiples. COVID-19 presents significant
measurement uncertainties associated with the assumptions about the Company’s future operating results used in
calculating the recoverable amount for impairment testing at March 31, 2022.
Revenue recognition and contracts in progress
The nature of ATS contracts requires the use of estimates to quote new business, and most automation systems are
typically sold on a fixed-price basis. Revenues on construction contracts and other long-term contracts are recognized on a
percentage of completion basis as outlined in note 3(c) “Revenue recognition – Construction contracts” to the consolidated
financial statements. In applying the accounting policy on construction contracts, judgment is required in determining the
estimated costs to complete a contract. These cost estimates are reviewed at each reporting period and by their nature may
give rise to income volatility. If the actual costs incurred by the Company to complete a contract are significantly higher than
estimated, the Company’s earnings may be negatively affected. The use of estimates involves risks, including volatility within
the supply chain that can lead to inflation to the price of inputs as well as the work to be performed involving varying
degrees of technical uncertainty, including possible development work to meet the customer’s specification, the extent of
which is sometimes not determinable until after the project has been awarded. In the event the Company is unable to meet
the defined performance specification for a contracted automation system, it may need to redesign and rebuild all or a
portion of the system at its expense without an increase in the selling price. Certain contracts may have provisions that
reduce the selling price or provide purchase price refunds if the Company fails to deliver or complete the contract by
specified dates. These provisions may expose the Company to liabilities or adversely affect the Company’s results of
operations or financial position.
45
MANAGEMENT’S DISCUSSION AND ANALYSIS
ATS’ contracts may be terminated by customers in the event of a default by the Company or, in some cases, for the
convenience of the customer. In the event of a termination for convenience, the Company typically negotiates a payment
provision reflective of the progress achieved on the contract and/or the costs incurred to the termination date. If a contract
is cancelled, Order Backlog is reduced and production utilization may be negatively impacted.
A complete provision, which can be significant, is made for losses on such contracts when the losses first become known.
Revisions in estimates of costs and profits on contracts, which can also be significant, are recorded in the accounting period
in which the relevant facts impacting the estimates become known.
A portion of ATS’ revenue is recognized when earned, which is generally at the time of shipment and transfer of title to the
customer, provided collection is reasonably assured.
Investment tax credits and income taxes
Investment tax credit assets, disclosed in note 18 to the consolidated financial statements, are recognized as a reduction of
the related expenses in the year in which the expenses are incurred, provided there is reasonable assurance that the credits
will be realized. Management has made estimates and assumptions in determining the expenditures eligible for the
investment tax credits’ claim and the amount could be materially different from the recorded amount upon review by the
government. Deferred income tax assets, disclosed in note 18 to the consolidated financial statements, are recognized to
the extent that it is probable that taxable income will be available against which the losses can be utilized. Significant
management judgment is required to determine the amount of deferred income tax assets that can be recognized based
upon the likely timing and level of future taxable income together with future tax-planning strategies.
If the assessment of the Company’s ability to utilize the deferred income tax asset changes, the Company would be required
to recognize more or fewer deferred income tax assets, which would increase or decrease income tax expense in the period
in which this is determined. The Company establishes provisions based on reasonable estimates for possible consequences
of audits by the tax authorities of the respective countries in which it operates. The amount of such provisions is based on
various factors, such as experience of previous taxation audits and differing interpretations of tax regulations by the taxable
entity and the respective tax authority. The provisions for uncertain tax positions are made using the best estimate of the
amount expected to be paid based on a qualitative assessment of all relevant factors. The Company reviews the adequacy
of these provisions at each quarter. However, it is possible that at some future date an additional liability could result from
audits by taxation authorities. Where the final tax outcome of these matters is different from the amount initially recorded,
such differences will affect the tax provisions in the period in which such determination is made.
Stock-based payment transactions
The Company measures the cost of transactions with employees by reference to the fair value of the equity instruments at
the date at which they are granted. Estimating fair value for stock-based payment transactions requires the determination
of the most appropriate valuation model, which is dependent on the terms and conditions of the grant. This estimate also
requires determination of the most appropriate inputs to the valuation model, including the future forfeiture rate, the
expected life of the share option, weighted average risk-free interest rate, volatility and dividend yield, and formation of
assumptions. The assumptions and models used for estimating fair value for stock-based payment transactions are
disclosed in note 19 to the consolidated financial statements.
Impairment of non-financial assets
Impairment exists when the carrying value of an asset or cash-generating unit exceeds its recoverable amount, which is the
higher of its fair value less costs to sell and its value in use. The calculations involve significant estimates and assumptions.
Items estimated include cash flows, discount rates and assumptions of revenue growth rates. These estimates could affect
the Company’s future results if current estimates of future performance and fair values change. Goodwill is assessed for
impairment on an annual basis as described in note 11 to the consolidated financial statements. The Company performed its
annual impairment test of goodwill as at March 31, 2022 and determined there was no impairment (March 31, 2021 – $nil).
4 6
ATS AUTOMATION /// ANNUAL REPORT 2022
Provisions
As described in note 3(n) to the consolidated financial statements, the Company records a provision when an obligation
exists, an outflow of economic resources required to settle the obligation is probable, and a reliable estimate can be made
of the amount of the obligation. The Company records a provision based on the best estimate of the required economic
outflow to settle the present obligation at the consolidated statement of financial position date. While management believes
these estimates are reasonable, differences in actual results or changes in estimates could have a material impact on the
obligations and expenses reported by the Company.
Employee benefits
The cost of defined benefit pension plans and the present value of the pension obligations are determined using actuarial
valuations. An actuarial valuation involves making various assumptions that may differ from actual developments in the
future. These include the determination of the discount rate, future salary increases, mortality rates and future pension
increases. Due to the complexity of the valuation, the underlying assumptions and its long-term nature, a defined benefit
obligation is highly sensitive to changes in these assumptions. All assumptions are reviewed at each reporting date.
In determining the appropriate discount rate, management considers the interest rates of corporate bonds in their respective
currency, with extrapolated maturities corresponding to the expected duration of the defined benefit obligation. The mortality
rate is based on publicly available mortality tables for the specific country. Future salary increases and pension increases
are based on expected future inflation rates for the respective country. Further details about the assumptions used are
provided in note 15 to the consolidated financial statements.
Changes in Accounting Policies
Accounting standards adopted in fiscal 2022
The Company has not adopted any standard, interpretation or amendment that had or is expected to have an impact
on the Company.
Controls and Procedures
The Chief Executive Officer (“CEO”) and the Chief Financial Officer (“CFO”) of the Company are responsible for establishing
and maintaining disclosure controls and procedures and internal controls over financial reporting for the Company. The
control framework used in the design of disclosure controls and procedures and internal control over financial reporting is
the “Internal Control – Integrated Framework (2013)” issued by the Committee of Sponsoring Organizations of the Treadway
Commission (“COSO”).
Disclosure controls and procedures
An evaluation of the design and operating effectiveness of the Company’s disclosure controls and procedures was conducted
as of March 31, 2021 under the supervision of the CEO and CFO as required by CSA National Instrument 52-109 –
Certification of Disclosure in Issuers’ Annual and Interim Filings. The evaluation included documentation, review, enquiries
and other procedures considered appropriate in the circumstances. Based on that evaluation, the CEO and the CFO have
concluded that the Company’s disclosure controls and procedures are effective to provide reasonable assurance that
information relating to the Company and its consolidated subsidiaries required to be disclosed in reports filed under
provincial and territorial securities legislation is recorded, processed, summarized and reported to senior management,
including the CEO and the CFO. This ensures that appropriate decisions can be made by them regarding required disclosure
within the time periods specified in provincial and territorial securities legislation.
47
MANAGEMENT’S DISCUSSION AND ANALYSIS
Internal control over financial reporting
CSA National Instrument 52-109 requires the CEO and CFO to certify that they are responsible for establishing and
maintaining internal control over financial reporting for the Company, and that those internal controls have been designed
and are effective in providing reasonable assurance regarding the reliability of financial reporting and the preparation of
financial statements in accordance with IFRS.
The CEO and CFO have, using the framework and criteria established in “Internal Control – Integrated Framework (2013)”
issued by COSO, evaluated the design and operating effectiveness of the Company’s internal controls over financial
reporting. They concluded that, as of March 31, 2022, internal controls over financial reporting were effective to provide
reasonable assurance that information related to consolidated results and decisions to be made based on those results
were appropriate.
There were no significant changes or material weaknesses in the design of the Company’s internal controls over financial
reporting during fiscal 2022 that have materially affected, or are reasonably likely to materially affect, the Company’s internal
control over financial reporting.
Management, including the CEO and CFO, does not expect that the Company’s disclosure controls or internal controls over
financial reporting will prevent or detect all errors and all fraud or will be effective under all potential future conditions.
A control system is subject to inherent limitations and, no matter how well designed and operated, can provide only
reasonable, not absolute, assurance that the control system’s objectives will be met.
Limitation on scope
BioDot was acquired on June 1, 2021, and SP was acquired on December 3, 2021. BioDot earnings were consolidated from
June 1, 2021, and SP earnings were consolidated from December 3, 2021. Management has not fully completed its review
of internal controls over financial reporting for these newly acquired organizations. Since the acquisitions occurred within
365 days of the reporting period, management has limited the scope of design and subsequent evaluation of disclosure
controls and procedures and internal controls over financial reporting, as permitted pursuant to National Instrument
52-109 - Certification of Disclosure in Issuers’ Annual and Interim Filings. For the period covered by this MD&A, management
has undertaken additional procedures to satisfy itself with respect to the accuracy and completeness of the acquired
operations’ financial information. The following summary of financial information pertains to the acquisitions that were
included in ATS’ consolidated financial statements for the year ended March 31, 2022.
(millions of dollars)
Revenue1
Net loss1
Current assets2
Non-current assets2
Current liabilities2
Non-current liabilities2
1 Results from June 1, 2021 to March 31, 2022.
2 Balance sheet as at March 31, 2022.
$
$
$
$
$
$
126.8 million
(9.2) million
151.3 million
692.1 million
83.2 million
230.0 million
4 8
ATS AUTOMATION /// ANNUAL REPORT 2022
Other Major Considerations and Risk Factors
Any investment will be subject to risks inherent to ATS’ business. The following risk factors are discussed in the
Company’s Annual Information Form for fiscal 2022, which may be found on SEDAR at www.sedar.com.
• Market volatility;
• Inflation risks;
• Geopolitical disputes and conflicts;
• Regional energy shortages;
• Price increases;
• Macroeconomic or industry conditions risks;
• Strategy execution risks;
• Acquisition risks;
• Expansion risks;
• Pandemic and epidemic risks;
• Natural or other disasters, acts of war, terrorism, international conflicts or other disruptions;
• Industry consolidation;
• Liquidity, access to capital markets and leverage;
• Security breaches or disruptions of information technology systems risks;
• Restrictive covenants;
• Availability of performance and other guarantees from financial institutions;
• Share price volatility;
• Competition;
• First-time program and production risks;
• Automation systems pricing;
• Revenue mix risk;
• Pricing, quality, delivery and volume risks;
• Product failure;
• New product market acceptance, obsolescence, and commercialization;
• Insurance coverage;
• Availability of raw materials and other manufacturing inputs;
• Customer risks;
• Insolvency or financial distress of third parties;
• Availability of human resources and dependence on key personnel;
• Cumulative loss of several significant contracts;
• Lengthy sales cycles;
• Lack of long-term customer commitment;
• Foreign exchange risk;
• Doing business in foreign countries;
• International trade;
• Conditions in China;
• China subsidiaries’ permits and business licenses;
• Misuse of China subsidiaries’ chops;
• Costs of labour in China;
• Enforcing rights and judgments in China;
• Legislative compliance;
49
MANAGEMENT’S DISCUSSION AND ANALYSIS
• Environmental compliance;
• Canadian Corruption of Foreign Public Officials Act, United States Foreign Corrupt Practices Act and anti-bribery
laws risk;
• Intellectual property protection risks;
• Infringement of third parties’ intellectual property rights risk;
• Internal controls;
• Impairment of intangible assets risk;
• Income and other taxes and uncertain tax liabilities;
• Variations in quarterly results;
• Litigation;
• Risks associated with product businesses;
• Environmental, social and governance considerations risk;
• Manufacturing facilities disruption;
• Restructuring and work stoppage risk; and
• Dependence on performance of subsidiaries.
Forward-Looking Statements
This management’s discussion and analysis of financial conditions, 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”); potential impacts on the time to covert 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 expand its services revenues;
Company’s goal of expanding its adjusted earnings from operations margin over the long term and potential impact of supply
chain disruptions and longer lead times; expectation of synergies from integration of acquired businesses; the uncertainty
and potential impact of COVID-19 and government emergency measures; non-cash working capital levels as a percentage of
revenues; expectation in relation to meeting liquidity and funding requirements for investments; potential to use debt or
equity financing to support growth strategy; expected capital expenditures for fiscal 2023; and the Company’s belief with
respect to the outcome of certain lawsuits, claims and contingencies.
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; impact of inflation; foreign currency and exchange risk; the relative
strength of the Canadian dollar; impact of factors such as increased pricing pressure, increased cost of 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, or to raise, through debt or equity, or otherwise have available,
required capital; that the ABM is not effective in accomplishing its goals; 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 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
5 0
ATS AUTOMATION /// ANNUAL REPORT 2022
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; 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 is 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; assumption of successful implementation of margin improvement initiative; 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.
Non-IFRS and Other Financial 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
operating 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 prior period. Organic revenue growth
compares the stated period organic revenue with the reported revenue of the comparable 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 operating 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.
51
MANAGEMENT’S DISCUSSION AND ANALYSIS
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 operating 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
twelve-month periods ended March 31, 2022 and March 31, 2021 is contained in this MD&A (see “Reconciliation of
Non-IFRS Measures to IFRS Measures”). This MD&A 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 March 31, 2022 and
March 31, 2021 (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 twelve-month periods ended March 31, 2022 and March 31,
2021 is also contained in this MD&A (see “Order Backlog Continuity”).
5 2
Management’s Responsibility
for Financial Reporting
The preparation and presentation of the Company’s consolidated financial statements is the responsibility of
management. The consolidated financial statements have been prepared by management in accordance with International
Financial Reporting Standards as issued by the International Accounting Standards Board. The consolidated financial
statements and other information in Management’s Discussion and Analysis include amounts that are based on
estimates and judgments. Management has determined such amounts on a reasonable basis in order to ensure that the
consolidated financial statements are presented fairly, in all material respects. Financial information presented elsewhere
in Management’s Discussion and Analysis is consistent with that in the consolidated financial statements, except as
described further in the “Non-IFRS Measures” section of Management’s Discussion and Analysis.
Management maintains appropriate systems of internal accounting and administrative controls, which are designed to
provide reasonable assurance regarding the reliability of financial reporting and the preparation of consolidated financial
statements in accordance with International Financial Reporting Standards as further described in the “Controls and
Procedures” section of Management’s Discussion and Analysis.
Management’s responsibilities for financial reporting are overseen by the Board of Directors (the “Board”), which is
ultimately responsible for reviewing and approving the consolidated financial statements. The Board carries out this
responsibility principally through its Audit and Finance Committee (the “Committee”).
The Committee is appointed by the Board and all of its members are independent directors. The Committee meets
periodically with management and the internal and the external auditor to discuss internal controls over the financial
reporting process, auditing matters and financial reporting issues, to satisfy itself that each party is properly discharging
its responsibilities and to review the consolidated financial statements and the external auditor’s report. The Committee
has reported its findings to the Board, which has approved the consolidated financial statements and Management’s
Discussion and Analysis for issuance to shareholders. The Committee also considers, for review by the Board and
approval of shareholders, the engagement or reappointment of the external auditor.
The consolidated financial statements have been audited on behalf of shareholders by Ernst & Young LLP, the external
auditor, in accordance with Canadian generally accepted auditing standards. The external auditor has full and free access
to management and the Committee.
Andrew Hider
Chief Executive Officer
Ryan McLeod
Chief Financial Officer
53
ATS AUTOMATION /// ANNUAL REPORT 2022 Independent Auditor’s Report
To the Shareholders of
ATS Automation Tooling Systems Inc.
Opinion
We have audited the consolidated financial statements of ATS Automation Tooling Systems Inc. and its subsidiaries, (the
“Company”), which comprise the consolidated statements of financial position as at March 31, 2022 and 2021, and the
consolidated statements of income, consolidated statements of comprehensive income, consolidated statements of
changes in equity and consolidated statements of cash flows for the years then ended, and notes to the consolidated
financial statements, including a summary of significant accounting policies.
In our opinion, the accompanying consolidated financial statements present fairly, in all material respects, the
consolidated financial position of the Company as at March 31, 2022 and 2021, and its consolidated results of financial
performance and its consolidated cash flows for the years then ended in accordance with International Financial
Reporting Standards (“IFRS”), as issued by the International Accounting Standards Board.
Basis for opinion
We conducted our audit in accordance with Canadian generally accepted auditing standards. Our responsibilities under
those standards are further described in the Auditor’s Responsibilities for the Audit of the Consolidated Financial
Statements section of our report. We are independent of the Company in accordance with the ethical requirements that
are relevant to our audit of the consolidated financial statements in Canada, and we have fulfilled our other ethical
responsibilities in accordance with these requirements. We believe that the audit evidence we have obtained is sufficient
and appropriate to provide a basis for our opinion.
Key audit matter
Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the
consolidated financial statements of the current period. These matters were addressed in the context of our audit of the
consolidated financial statements as a whole, and in forming our auditor’s opinion thereon, and we do not provide a
separate opinion on these matters. For each matter below, our description of how our audit addressed the matter is
provided in that context.
We have fulfilled the responsibilities described in the Auditor’s Responsibilities for the Audit of the Consolidated Financial
Statements section of our report, including in relation to these matters. Accordingly, our audit included the performance of
procedures designed to respond to our assessment of the risks of material misstatement of the consolidated financial
statements. The results of our audit procedures, including the procedures performed to address the matters below,
provide the basis for our audit opinion on the accompanying consolidated financial statements.
5 4
Estimate to complete on long-term revenue construction contracts
Key audit matter
How our audit addressed the key audit matter
The Company is involved in the design and build of
custom-engineered automated manufacturing and test
systems which consist of long-term projects which can
span from several months to several years. Revenue from
these fixed-price construction contracts is recognized
progressively based on the percentage-of-completion
method. This method is measured by reference to costs
incurred to date as a percentage of the total estimated
costs to complete a contract. The Company’s policy for
revenue recognition together with the related critical
accounting estimates and judgments are described in
notes 3 and 4 of the consolidated financial statements.
The Company recognized $1,359,695 of revenues on
long-term construction contracts for the year ended
March 31, 2022 related to these contracts.
We identified the evaluation of the estimated costs to
complete for significant open fixed-price construction
contracts as a key audit matter because of the significant
auditor judgment required. The total estimated costs to
complete each significant open fixed-price construction
contract drives the timing of revenue, profit recognition and
involves significant judgments that can have a material
impact on the amount of revenue recognized. These
significant judgments include those related to estimated
future labour and materials costs. These estimates are
subjective and complex due to the long-term and unique
nature of many of the projects and are dependent on the
status of the individual project as of the period-end date.
Based on our risk assessment, we performed the following
procedures, among others, for a sample of significant open
fixed-price construction contracts as of the year-end date:
• We obtained an understanding, evaluated the design,
and, at certain locations, tested the operating
effectiveness of controls related to the Company’s
initial budgeting process for new contracts;
• We inquired and evaluated the consistency of
responses obtained from operational personnel across
various levels of management regarding risks and
uncertainties with respect to significant fixed-price
construction contracts as well as the nature of the work
yet to be completed and estimated costs to complete
such work;
• We inspected contractual arrangements, change orders
and evaluated the impact on estimated costs to
complete for revenue recognition;
• We compared a sample of estimated costs to vendor
quotes, purchase orders or contractual labour rates;
• We performed a look back analysis where we compared
the current margin for projects to the initial margin or
that of previous periods and investigated differences
from expectations; and
• We assessed the adequacy of disclosures in describing
the areas of judgment and estimation uncertainties
involving revenue recognition for in-progress contracts.
55
ATS AUTOMATION /// ANNUAL REPORT 2022 INDEPENDENT AUDITOR’S REPORT
Valuation of acquired intangible assets in business combinations
Key audit matter
The Company completed the acquisitions of SP Industries,
Inc., NCC Automation Systems Inc., and Biodot, Inc. during
the year ended March 31, 2022 in addition to finalizing the
purchase price allocation of the CFT S.p.A acquisition
completed during the year ended March 31, 2021 as
disclosed in note 5. The total purchase price for these
business combinations was $875 million. The purchase
price allocations include goodwill of $473 million and
intangible assets, such as technology, customer lists and
brands of $442 million as at the respective acquisition
dates. The determination of the fair value of intangible
assets acquired requires management to make significant
judgments, estimates and key assumptions over the
projected financial information including forecasted
revenue growth rates, margin percentages, attrition rates,
royalty rates, discount rates, and engage a third-party
specialist.
Auditing the business combinations was complex due to
the subjective nature of estimating the fair value of the
acquired intangible assets.
How our audit addressed the key audit matter
To test the Company’s estimate of fair value of the
acquired intangible assets, we performed the following
procedures, among others:
• Read the purchase agreement to obtain an
understanding of the key terms and conditions to
identify the necessary accounting considerations
and the identification of assets acquired and
liabilities assumed;
• Assessed the competence and objectivity of
management’s third-party specialist;
• Involved our valuation specialists to assess the
valuation methodology applied in estimating the fair
value of the intangible assets acquired and the key
assumptions utilized, including the discount rates and
royalty rates, by referencing current industry and
comparable company information as well as cash flow
and company specific risk;
• Assessed the appropriateness of forecasted revenue
growth rates, margin percentages, and attrition rates
used in the estimation of fair value of the intangible
assets acquired by comparing to historical
performance, similar acquisitions made by the
Company, market data, and industry trends; and
• We assessed the adequacy of disclosures involving
valuation of acquired intangible assets in business
combinations.
5 6
Other information
Management is responsible for the other information. The other information comprises:
• Management’s Discussion and Analysis
• The information, other than the consolidated financial statements and our auditor’s report thereon, in the
Annual Report.
Our opinion on the consolidated financial statements does not cover the other information and we do not express
any form of assurance conclusion thereon.
In connection with our audit of the consolidated financial statements, our responsibility is to read the other information,
and in doing so, consider whether the other information is materially inconsistent with the consolidated financial
statements or our knowledge obtained in the audit or otherwise appears to be materially misstated.
We obtained Management’s Discussion and Analysis prior to the date of this auditor’s report. If, based on the work we
have performed, we conclude that there is a material misstatement of this other information, we are required to report
that fact in this auditor’s report. We have nothing to report in this regard.
The Annual Report is expected to be made available to use after the date of the auditor’s report. If based on the work we
will perform on this other information, we conclude there is a material misstatement of other information, we are required
to report that fact to those charged with governance.
Responsibilities of management and those charged with governance for the consolidated
financial statements
Management is responsible for the preparation and fair presentation of the consolidated financial statements in
accordance with IFRS, and for such internal control as management determines is necessary to enable the preparation
of consolidated financial statements that are free from material misstatement, whether due to fraud or error.
In preparing the consolidated financial statements, management is responsible for assessing the Company’s ability to
continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern
basis of accounting unless management either intends to liquidate the Company or to cease operations, or has no
realistic alternative but to do so.
Those charged with governance are responsible for overseeing the Company’s financial reporting process.
57
ATS AUTOMATION /// ANNUAL REPORT 2022 INDEPENDENT AUDITOR’S REPORT
Auditor’s responsibilities for the audit of the consolidated financial statements
Our objectives are to obtain reasonable assurance about whether the consolidated financial statements as a whole are
free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion.
Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with
Canadian generally accepted auditing standards will always detect a material misstatement when it exists. Misstatements
can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be
expected to influence the economic decisions of users taken on the basis of these consolidated financial statements.
As part of an audit in accordance with Canadian generally accepted auditing standards, we exercise professional
judgment and maintain professional skepticism throughout the audit. We also:
• Identify and assess the risks of material misstatement of the consolidated financial statements, whether due to fraud
or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient
and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from
fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions,
misrepresentations, or the override of internal control.
• Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are
appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the
Company’s internal control.
• Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related
disclosures made by management.
• Conclude on the appropriateness of management’s use of the going concern basis of accounting and, based on the
audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant
doubt on the Company’s ability to continue as a going concern. If we conclude that a material uncertainty exists, we
are required to draw attention in our auditor’s report to the related disclosures in the consolidated financial statements
or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence
obtained up to the date of our auditor’s report. However, future events or conditions may cause the Company to cease
to continue as a going concern.
• Evaluate the overall presentation, structure and content of the consolidated financial statements, including the
disclosures, and whether the consolidated financial statements represent the underlying transactions and events in a
manner that achieves fair presentation.
• Obtain sufficient appropriate audit evidence regarding the financial information of entities or business activities within
the Company to express an opinion on the consolidated financial statements. We are responsible for the direction,
supervision and performance of the group audit. We remain solely responsible for our audit opinion.
We communicate with those charged with governance regarding, among other matters, the planned scope and timing of the
audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit.
We also provide those charged with governance with a statement that we have complied with relevant ethical
requirements regarding independence, and to communicate with them all relationships and other matters that may
reasonably be thought to bear on our independence, and where applicable, related safeguards.
The engagement partner on the audit resulting in this independent auditor’s report is Scott Kerr.
Chartered Professional Accountants
Licensed Public Accountants
Toronto, Canada
May 18, 2022
5 8
Consolidated Statements of Financial Position
(in thousands of Canadian dollars)
As at
ASSETS
Current assets
Cash and cash equivalents
Accounts receivable
Income tax receivable
Contract assets
Inventories
Deposits, prepaids and other assets
Non-current assets
Property, plant and equipment
Right-of-use assets
Other assets
Goodwill
Intangible assets
Deferred income tax assets
Investment tax credit receivable
Total assets
LIABILITIES AND EQUITY
Current liabilities
Bank indebtedness
Accounts payable and accrued liabilities
Income tax payable
Contract liabilities
Provisions
Current portion of lease liabilities
Current portion of long-term debt
Non-current liabilities
Employee benefits
Long-term lease liabilities
Long-term debt
Deferred income tax liabilities
Other long-term liabilities
Total liabilities
Commitments and contingencies
EQUITY
Share capital
Contributed surplus
Accumulated other comprehensive income
Retained earnings
Equity attributable to shareholders
Non-controlling interests
Total equity
Total liabilities and equity
On behalf of the Board:
Note March 31, 2022 March 31, 2021*
16
22
22
6
7
10
8
9
11
12
18
18
16
22
14
8
16
15
8
16
18
9
16, 20
17
$
$
$
$
$
$
135,282
348,631
9,038
360,820
207,873
84,818
1,146,462
222,123
81,289
18,631
1,024,790
568,180
7,922
–
1,922,935
3,069,397
1,766
501,465
48,617
248,329
24,825
19,964
43
845,009
29,132
62,856
1,016,668
126,114
3,935
1,238,705
2,083,714
530,241
11,734
22,848
416,773
981,596
4,087
985,683
3,069,397
$
187,467
285,947
8,158
272,847
138,011
37,807
930,237
180,296
72,570
5,882
667,016
282,224
11,087
52,440
1,271,515
$ 2,201,752
$
1,106
368,901
30,998
218,290
29,034
15,197
79
663,605
34,110
57,764
430,634
78,974
26,305
627,787
$ 1,291,392
$
526,446
11,170
59,830
297,818
895,264
15,096
910,360
$ 2,201,752
David McAusland
Director
Joanne S. Ferstman
Director
See accompanying notes to the consolidated financial statements.
* Certain balances as at March 31, 2021 have been re-presented as a result of measurement period adjustments for the acquisition of CFT S.p.A. (“CFT”)
as required by IFRS 3, Business Combinations (see note 5).
59
ATS AUTOMATION /// ANNUAL REPORT 2022 Consolidated Statements of Income
(in thousands of Canadian dollars, except per share amounts)
Years ended March 31
Note
2022
2021
Revenues
Revenues from construction contracts
Services rendered
Sale of goods
Total revenues
Operating costs and expenses
Cost of revenues
Selling, general and administrative
Restructuring costs
Stock-based compensation
Earnings from operations
Net finance costs
Income before income taxes
Income tax expense
Net income
Attributable to
Shareholders
Non-controlling interests
Earnings per share attributable to shareholders
Basic
Diluted
See accompanying notes to the consolidated financial statements.
$
$
$
$
$
$
1,359,695
485,717
337,305
2,182,717
1,570,287
387,108
5,949
32,762
186,611
32,200
154,411
33,019
121,392
122,101
(709)
121,392
1.32
1.31
$
$
$
$
$
$
895,086
413,323
121,643
1,430,052
1,045,795
236,013
14,355
14,280
119,609
40,152
79,457
15,354
64,103
64,092
11
64,103
0.70
0.69
21, 22
14
19
24
18
25
25
6 0
Consolidated Statements of Comprehensive Income
(in thousands of Canadian dollars)
Years ended March 31
Net income
Other comprehensive income (loss):
Items to be reclassified subsequently to net income:
Currency translation adjustment (net of income taxes of $nil)
Net unrealized gain (loss) on derivative financial instruments
designated as cash flow hedges
Tax impact
Loss (gain) transferred to net income for derivatives
designated as cash flow hedges
Tax impact
Cross currency interest rate swap adjustment
Tax impact
Items that will not be reclassified subsequently to net income:
Actuarial gains (losses) on defined benefit pension plans
Tax impact
Other comprehensive loss
Comprehensive income
Attributable to
Shareholders
Non-controlling interests
See accompanying notes to the consolidated financial statements.
Note
2022
2021
$
121,392
$
64,103
(35,384)
(21,599)
(175)
63
166
(46)
(2,457)
614
2,594
(714)
(35,339)
86,053
86,999
(946)
86,053
$
$
$
8,228
(2,063)
(1,398)
351
(21,698)
5,424
(3,653)
1,042
(35,366)
28,737
28,726
11
28,737
13
13
13
15
$
$
$
61
ATS AUTOMATION /// ANNUAL REPORT 2022
Consolidated Statements of Changes in Equity
(in thousands of Canadian dollars)
Year ended
March 31, 2022
Share capital
Contributed
surplus
Retained
earnings
Currency
translation
adjustments
Cash flow
hedge reserve
Total
accumulated
other
comprehensive
income
Non-
controlling
interests
Total equity
$ 526,446 $
11,170 $ 297,818 $
59,559 $
122,101
–
271 $
–
59,830 $
–
15,096 $ 910,360
121,392
(709)
Balance, as at
March 31, 2021
Net income
Other comprehensive
income (loss)
Total comprehensive
income (loss)
Non-controlling interest
(note 5)
Stock-based
compensation
Exercise of stock options
Balance, as at
March 31, 2022
–
–
–
–
–
–
–
–
–
3,795
1,365
(801)
1,880
(35,147)
(1,835)
(36,982)
(237)
(35,339)
123,981
(35,147)
(1,835)
(36,982)
(946)
86,053
(5,026)
–
–
–
–
–
–
–
–
–
–
–
(10,063)
(15,089)
–
–
1,365
2,994
$ 530,241 $
11,734 $ 416,773 $
24,412 $
(1,564) $
22,848 $
4,087 $ 985,683
Year ended
March 31, 2021
Share capital
Contributed
surplus
Retained
earnings
Currency
translation
adjustments
Cash flow
hedge reserve
Total
accumulated
other
comprehensive
income
Non-
controlling
interests
Total equity
Balance, as at
March 31, 2020
Net income
Other comprehensive
loss
Total comprehensive
income (loss)
Non-controlling interest
(note 5)
Stock-based
compensation
Exercise of
stock options
Repurchase of
common shares
(note 17)
Balance, as at
March 31, 2021
$
521,884 $
11,680 $
–
–
–
–
–
–
–
–
–
864
7,485
(1,374)
242,076 $
64,092
81,158 $
11,427 $
92,585 $
–
–
–
788 $
11
869,013
64,103
(2,611)
(21,599)
(11,156)
(32,755)
–
(35,366)
61,481
(21,599)
(11,156)
(32,755)
11
28,737
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
14,297
14,297
–
–
–
864
6,111
(8,662)
(2,923)
–
(5,739)
$
526,446 $
11,170 $
297,818 $
59,559 $
271 $
59,830 $
15,096 $
910,360
See accompanying notes to the consolidated financial statements.
6 2
Consolidated Statements of Cash Flows
(in thousands of Canadian dollars)
Years ended March 31
Note
2022
2021
Operating activities
Net income
Items not involving cash
Depreciation of property, plant and equipment
Amortization of right-of-use assets
Amortization of intangible assets
Deferred income taxes
Other items not involving cash
Stock-based compensation
Gain on disposal of property, plant and equipment
Change in non-cash operating working capital
Cash flows provided by operating activities
Investing activities
Acquisition of property, plant and equipment
Acquisition of intangible assets
Business acquisitions, net of cash acquired
Proceeds from disposal of property, plant and equipment
Cash flows used in investing activities
Financing activities
Bank indebtedness
Repayment of long-term debt
Proceeds from long-term debt
Purchase of non-controlling interests
Proceeds from exercise of stock options
Repurchase of common shares
Principal lease payments
Cash flows provided by (used in) financing activities
Effect of exchange rate changes on cash and cash equivalents
Decrease in cash and cash equivalents
Cash and cash equivalents, beginning of year
Cash and cash equivalents, end of year
Supplemental information
Cash income taxes paid
Cash interest paid
See accompanying notes to the consolidated financial statements.
10
8
12
18
19
10
10
12
5
10
5
17
$
121,392
$
64,103
20,917
22,202
72,302
(35,612)
27,895
1,365
–
230,461
(14,298)
216,163
(36,309)
(16,957)
(745,018)
817
(797,467)
(1,322)
(158,626)
746,223
(38,187)
2,994
–
(19,547)
531,535
(2,416)
(52,185)
187,467
135,282
24,126
30,797
$
$
$
$
$
$
$
$
14,820
16,111
39,987
(29,054)
7,282
864
(6,505)
107,608
77,551
185,159
(21,541)
(10,031)
(68,523)
11,963
(88,132)
(3,585)
(742,091)
504,315
–
6,111
(8,662)
(15,204)
(259,116)
(9,089)
(171,178)
358,645
187,467
6,528
38,428
$
$
$
$
$
$
$
$
63
ATS AUTOMATION /// ANNUAL REPORT 2022 Notes to Consolidated Financial Statements
(in thousands of Canadian dollars, except per share amounts)
1. Corporate Information
ATS Automation Tooling Systems Inc. and its subsidiaries (collectively, “ATS” or the “Company”) uses its extensive
knowledge base and global capabilities in custom automation, repeat automation, automation products and value-added
services, including pre-automation and after-sales services, to address the sophisticated manufacturing automation
systems and service needs of multinational customers.
The Company is listed on the Toronto Stock Exchange and is incorporated and domiciled in Ontario, Canada. The address
of its registered office is 730 Fountain Street North, Cambridge, Ontario, Canada.
The consolidated financial statements of the Company for the year ended March 31, 2022 were authorized for issue by
the Board of Directors (the “Board”) on May 18, 2022.
2. Basis of Preparation
These consolidated financial statements were prepared on a historical cost basis, except for derivative instruments that
have been measured at fair value. The consolidated financial statements are presented in Canadian dollars and all values
are rounded to the nearest thousand, except where otherwise stated.
Statement of compliance
These consolidated financial statements are prepared in accordance with International Financial Reporting Standards
(“IFRS”), as issued by the International Accounting Standards Board.
Basis of consolidation
These consolidated financial statements include the accounts of the Company and its subsidiaries. Subsidiaries are
those entities where the Company directly or indirectly owns the majority of the voting power or can otherwise control the
activities. The financial statements of the subsidiaries are prepared for the same reporting period as the parent company,
using consistent accounting policies. Non-controlling interests in the equity and results of the Company’s subsidiaries are
presented separately in the consolidated statements of income and within equity on the consolidated statements of
financial position.
Subsidiaries are fully consolidated from the date of acquisition, being the date on which the Company obtains control, and
continue to be consolidated until the date that such control ceases. The Company’s material subsidiaries are Automation
Tooling Systems Enterprises GmbH, ATS Automation Holdings Limited, Automation Tooling Systems Enterprises Inc. and
ATS Automation Tooling Systems GmbH. The Company has a 100% voting and equity securities interest in each of these
corporations. All material intercompany balances, transactions, revenues and expenses and profits or losses, including
dividends resulting from intercompany transactions, have been eliminated on consolidation.
3. Summary of Significant Accounting Policies
(a) Business combinations and goodwill:
Business combinations are accounted for using the acquisition method. The cost of the acquisition is measured as the
aggregate of the consideration transferred, measured at the acquisition date fair value and the amount of any non-
controlling interest in the acquiree. For each business combination, the Company measures the non-controlling interest in
the acquiree either at fair value or at the proportionate share of the acquiree’s identifiable net assets. Acquisition costs
are expensed as incurred.
6 4
When the Company acquires a business, it assesses the financial assets and liabilities assumed (other than deferred
income taxes) based upon the estimated fair values at the date of acquisition. The Company determines the fair value of
the assets acquired and the liabilities assumed based on discounted cash flows, market information and information that
is available to the Company.
Any contingent consideration to be transferred by the acquirer will be recognized at fair value at the acquisition date.
Subsequent changes in the fair value of the contingent consideration that is deemed to be an asset or liability will be
recognized in accordance with IFRS 9 – Financial Instruments (“IFRS 9”) in profit or loss. If the contingent consideration is
classified as equity, it will not be remeasured. Subsequent settlement is accounted for within equity. In instances where
the contingent consideration does not fall within the scope of IFRS 9, it is measured in accordance with the appropriate
IFRS policy.
Goodwill represents the excess of the cost of an acquisition over the fair value of the Company’s share of the net
identifiable assets of the acquiree at the date of acquisition.
After initial recognition, goodwill is measured at cost less any accumulated impairment losses. For the purpose of
impairment testing, goodwill is allocated to cash-generating units (“CGUs”) or groups of CGUs based on the level at which
management monitors it. The allocation is made to those CGUs or groups of CGUs that are expected to benefit from the
business combination in which the goodwill arose.
Where goodwill forms part of a CGU and part of the operation within that unit is disposed of, the goodwill associated with
the operation disposed of is included in the carrying amount of the operation when determining the gain or loss on
disposal of the operation. Goodwill disposed of in this circumstance is measured based on the relative fair values of the
operation disposed of and the portion of the CGU retained.
(b) Foreign currency:
Functional currency is the currency of the primary economic environment in which the subsidiary operates and is normally
the currency in which the subsidiary generates and uses cash. Each subsidiary in the Company determines its own
functional currency, and items included in the consolidated financial statements of each subsidiary are measured using
that functional currency. The Company’s functional and presentation currency is the Canadian dollar.
Transactions
Foreign currency transactions are initially recorded at the functional currency rate prevailing at the date of the transaction.
Monetary assets and liabilities denominated in foreign currencies are translated at the functional currency spot rate at
the reporting date. All differences are recorded in the consolidated statements of income. Non-monetary items that are
measured in terms of historical cost in a foreign currency are translated using the exchange rate at the dates of the initial
transactions. Non-monetary items measured at fair value in a foreign currency are translated using the exchange rates at
the date when the fair value is determined.
Translation
The assets and liabilities of foreign operations are translated into Canadian dollars at period-end exchange rates, and
their revenue and expense items are translated at exchange rates prevailing at the dates of the transactions. The
resulting exchange differences are recognized in other comprehensive income. On disposal of a foreign operation, the
component of other comprehensive income relating to that particular foreign operation is recognized in the consolidated
statements of income.
(c) Revenue:
The Company generates revenue from construction contracts, the sale of goods, and by services rendered. Revenue is
measured based on the consideration specified in a contract and the Company recognizes revenue when it transfers
control of a product or provides a service to a customer. If the contract includes variable consideration, such as volume
rebates, the Company only includes the amount in the transaction amount if it is measurable and highly probable to occur.
With respect to incremental costs such as sales commissions incurred in obtaining a contract, the Company has elected
to apply the practical expedient to expense these costs when incurred as the term of the Company’s contracts are
typically one year or less.
65
ATS AUTOMATION /// ANNUAL REPORT 2022 Construction contracts
A construction contract generally includes the design, manufacture and installation of new equipment for a customer’s
new or existing system. The Company generally considers a construction contract to contain one performance obligation.
However, the Company may provide several distinct goods or services as part of a contract, in which case, the Company
separates the contract into more than one performance obligation. If a contract is separated into more than one
performance obligation, the total transaction price is allocated to each performance obligation in an amount based on the
estimated relative standalone selling prices of the promised goods or services underlying each performance obligation.
The Company typically satisfies construction contract performance obligations over time; therefore, the Company
recognizes revenue over time as the performance obligations are satisfied using the stage of completion method as
described below:
• The stage of completion of fixed price contracts is measured based on costs incurred, excluding costs that are not
representative of progress to completion, as a percentage of total costs anticipated on each contract.
• The stage of completion of time and material contracts is measured using the right to invoice practical expedient –
revenue is recognized at the contractual rates as labour hours are delivered and direct expenses are incurred.
Payment terms on fixed price contracts are normally based on set milestones outlined in the contract. Amounts received
in advance of the associated contract work being performed are recorded as contract liabilities. Revenue is recognized
without issuing an invoice and this entitlement to consideration is recognized as a reduction of the contract liability or as
a contract asset. Payment terms on time and material contracts are normally based on a monthly billing cycle. When the
contract outcome cannot be measured reliably, revenue is recognized only to the extent that the expenses incurred are
eligible to be recovered. Provisions for estimated losses on incomplete contracts are made in the period that losses
are determined.
Sale of goods
Revenue related to the sale of goods is recognized at a point in time when the Company satisfies a performance
obligation and control of the asset is transferred to the customer. In determining satisfaction of a performance obligation,
the Company considers the terms of the contract, including: shipping terms, and transfer of title and risk.
Services rendered
Service contracts are either executed separately or bundled together with construction contracts. Where these contracts
are bundled together, they are regarded as separate performance obligations, as each of the promises are capable of
being distinct and are separately identifiable. Accordingly, a portion of the transaction price is allocated to each
performance obligation relative to standalone selling prices.
A service contract can include modifications to existing customer equipment, maintenance services, training, line
relocation, onsite support, field service, remote support, and consulting services. The Company generally considers
service contracts to contain one performance obligation, which is satisfied over time. Therefore, revenue is recognized
over time, using the stage of completion method described below:
• The stage of completion of fixed price contracts to provide specified services at specific times is measured based on
costs incurred, excluding costs that are not representative of progress to completion, as a percentage of total costs
anticipated on each contract.
• The stage of completion of fixed price contracts to provide an indeterminable number of services over a specified
period of time is measured based on contract term elapsed as a percentage of the full contract term.
• The stage of completion of time and material contracts is measured using the right to invoice practical expedient –
revenue is recognized at the contractual rates as labour hours are delivered and direct expenses are incurred.
Payment terms on service contracts are similar to construction contracts. Provisions for estimated losses on incomplete
contracts are made in the period that losses are determined.
6 6
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Revenue-related assets and liabilities:
Trade receivables
A trade receivable represents the Company’s right to an amount of consideration that is unconditional (i.e., only the
passage of time is required before payment of the consideration is due). Trade receivables are typically due upon
issuance of an invoice. Payment terms on fixed price contracts are normally based on set milestones outlined in the
contract. The ATS generally accepted payment terms (with regard to customer contracts) make it improbable that a
significant financing component would exist in contracts with customers. If there is a variable consideration component
to a contract, it is only included in the transaction price when it is highly probable that the consideration will result in
revenue and can be reliably measured.
There were no adverse impacts as a result of COVID-19 on the collection cycle of the Company.
Contract assets
Contract assets represent the right to consideration in exchange for goods or services that have been transferred
to a customer. These assets are transferred to accounts receivable when the right to receive the consideration
becomes unconditional.
Contract liabilities
Contract liabilities represent the obligation to transfer goods and services to a customer for which the Company has
received consideration (or an amount of consideration is due) from the customer. Contract liabilities are recognized as
revenue when the Company performs under the contract.
Unearned revenue
Unearned revenue relates to deposits or prepayments from customers for service and sale of goods contracts where
revenue is earned at a point in time.
(d) Investment tax credits and government grants:
Investment tax credits are accounted for as a reduction in the cost of the related asset or expense where there is
reasonable assurance that such credits will be realized. Government grants are recognized when there is reasonable
assurance that the grant will be received and all attached conditions will be met. When the grant relates to an expense
item, it is deducted from the cost that it is intended to compensate. When the grant relates to an asset, it is deducted
from the cost of the related asset. If a grant becomes repayable, the inception-to-date impact of the assistance previously
recognized in income is reversed immediately in the period in which the assistance becomes repayable.
(e) Taxes:
Current income tax
Current income tax assets and liabilities for the current and prior periods are measured at the amount expected to be
recovered from or paid to the taxation authorities. The tax rates and tax laws used to compute the amount are those that
are enacted or substantively enacted, by the reporting date, in the countries where the Company operates and generates
taxable income. Current income tax related to items recognized directly in equity is also recognized in equity and not in the
consolidated statements of income. Management periodically evaluates positions taken in the tax filings with respect to
situations in which applicable tax regulations are subject to interpretation, and establishes provisions where appropriate.
Deferred income tax
Deferred income tax is provided using the liability method on temporary differences at the reporting date between the tax
basis of assets and liabilities and their carrying amounts for financial reporting purposes. Deferred income tax assets and
liabilities are measured at the tax rates that are expected to apply in the period when the asset will be realized or the liability
will be settled, based on tax rates and tax laws that have been enacted or substantively enacted at the reporting date.
67
ATS AUTOMATION /// ANNUAL REPORT 2022 Deferred income taxes are recognized for all taxable temporary differences, except:
• When the deferred income tax liability arises from the initial recognition of goodwill or an asset or liability in a
transaction that is not a business combination and, at the time of the transaction, affects neither the accounting profit
nor taxable profit or loss.
• In respect of taxable temporary differences associated with investments in subsidiaries and interests in joint
operations, when the timing of the reversal of the temporary differences can be controlled and it is probable that the
temporary differences will not reverse in the foreseeable future.
Deferred income tax assets are recognized for all deductible temporary differences and carryforward of unused tax credits
and unused tax losses, to the extent that it is probable that taxable profit will be available against which the deductible
temporary differences and the carryforward of unused tax credits and unused tax losses can be utilized, except:
• When the deferred income tax asset relating to the deductible temporary difference arises from the initial recognition
of an asset or liability in a transaction that is not a business combination and, at the time of the transaction, affects
neither the accounting profit nor taxable profit or loss.
• In respect of deductible temporary differences associated with investments in subsidiaries and interests in joint
operations, deferred income tax assets are recognized only to the extent that it is probable that the temporary
differences will reverse in the foreseeable future and taxable profit will be available against which the temporary
differences can be utilized.
The carrying amount of deferred income tax assets is reviewed at each reporting date and reduced to the extent that it is
no longer probable that all or part of the deferred income tax asset will be utilized. Unrecognized deferred income tax
assets are reassessed at each reporting date and are recognized to the extent that it has become probable the benefit
will be recovered.
Deferred income tax assets and deferred income tax liabilities are offset if a legally enforceable right exists to offset
current income tax assets against current income tax liabilities and the deferred income taxes relate to the same taxable
entity and the same taxation authority.
Deferred income tax related to items recognized outside profit or loss is also recognized outside profit or loss. Deferred
income tax items are recognized in correlation to the underlying transaction either in other comprehensive income or
directly in equity.
Income tax benefits acquired as part of a business combination, but not satisfying the criteria for separate recognition at
that date, would be recognized subsequently if new information about facts and circumstances existing at the acquisition
date changed. The adjustment would either be treated as a reduction to goodwill (as long as it does not exceed goodwill)
if it is incurred during the measurement period or in profit or loss.
Revenues, expenses and assets are recognized net of the amount of sales tax, except where the sales tax incurred on a
purchase of assets or services is not recoverable from the taxation authority, in which case the sales tax is recognized as
part of the cost of acquisition of the asset or as part of the expense item as applicable. Receivables and payables are
stated with the amount of sales tax included.
The net amount of sales tax recoverable from, or payable to, the taxation authority is included as part of accounts
receivable or accounts payable and accrued liabilities on the consolidated statements of financial position.
(f) Property, plant and equipment:
Property, plant and equipment are stated at cost, net of accumulated depreciation and accumulated impairment losses, if
any. Such cost includes the cost of replacing component parts of the property, plant and equipment and borrowing costs
for long-term construction projects if the recognition criteria are met. When significant parts of property, plant and
equipment are required to be replaced at intervals, ATS derecognizes the replaced part and recognizes the new part with
its own associated useful life and depreciation. Likewise, when a major inspection is performed, its cost is recognized in
the carrying amount of the property, plant and equipment as a replacement if the recognition criteria are satisfied. All
other repair and maintenance costs are recognized in the consolidated statements of income as incurred.
6 8
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Depreciation is calculated on a straight-line basis over the estimated useful lives of the assets as follows:
Buildings
Production equipment
Other equipment
25 to 40 years
3 to 10 years
3 to 10 years
Leasehold improvements are amortized over the shorter of the term of the related lease or their remaining useful life on a
straight-line basis.
An item of property, plant and equipment or any significant part initially recognized is derecognized upon disposal or when
no future economic benefits are expected from its use or eventual disposition. Any gain or loss arising on derecognition of
the asset (calculated as the difference between the net disposal proceeds and the carrying amount of the asset) is
included in the consolidated statements of income when the asset is derecognized.
The assets’ residual values, useful lives and methods of depreciation are reviewed on an annual basis or more frequently
if required and adjusted prospectively, if appropriate.
(g) Leases:
At the inception of a contract, the Company determines whether a contract is, or contains, a lease based on whether the
contract conveys the right to control the use of an underlying asset for a period of time in exchange for consideration. The
Company recognizes a right-of-use (“ROU”) asset and a lease liability on the date the leased asset is available for use by
the Company (at the commencement of the lease).
Right-of-use assets
ROU assets are initially measured at cost, which is comprised of the initial amount of the lease liability, any initial direct
costs incurred and an estimate of costs to dismantle, remove or restore the underlying asset or site on which it is
located, less any lease payments made at or before the commencement date. Unless the Company is reasonably certain
to obtain ownership of the leased asset at the end of the lease term, a recognized ROU asset is depreciated using the
straight-line method over the shorter of its estimated useful life or the lease term. The ROU asset may be adjusted for
certain remeasurements of the lease liability and impairment losses.
Lease liabilities
The lease liability is initially measured at the present value of the lease payments that are not paid at the commencement
date, discounted using the incremental borrowing rate at the lease commencement date if the interest rate implicit in the
lease is not readily available. The Company uses a single discount rate for a portfolio of leases with reasonably similar
characteristics. Lease payments include fixed payments less any lease incentives, and any variable lease payments
where variability depends on an index or rate. The lease payments also include the exercise price of a purchase option
reasonably certain to be exercised by the Company and payment of penalties for termination of a lease. Each lease
payment is allocated between the repayment of the principal portion of the lease liability and the interest portion. The
finance cost is charged to net finance costs in the consolidated statements of income over the lease period. Payments
associated with short-term leases (lease term of 12 months or less) and leases of low-value assets are recognized on a
straight-line basis as an expense in the consolidated statements of income as permitted by IFRS 16.
The carrying amount of the lease liability is remeasured if there is a modification resulting in a change in the lease term, a
change in the future lease payments, or a change in the Company’s estimate of whether it will exercise a purchase,
extension or termination option. If the lease liability is remeasured, a corresponding adjustment is made to the ROU asset.
As a practical expedient, IFRS 16 permits a lessee to not separate non-lease components, but instead account for any
lease and associated non-lease components as a single arrangement. The Company has applied this practical expedient.
Determining the lease term of contracts with renewal or termination options
The lease term includes the non-cancellable term of the lease including extension and termination options if the Company
is reasonably certain to exercise the option. The Company applies judgment in evaluating whether it is reasonably certain
to exercise the options. All relevant factors that create an economic incentive for it to exercise the renewal are considered.
After the commencement date, the Company reassesses the lease term if there is a significant event or change in
circumstances that is within its control and affects its ability to exercise (or not to exercise) the option.
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ATS AUTOMATION /// ANNUAL REPORT 2022
(h) Borrowing costs:
Borrowing costs directly attributable to the acquisition, construction or production of an asset that necessarily takes a
substantial period of time to get ready for its intended use or sale are capitalized as part of the cost of the respective
asset. All other borrowing costs are expensed in the period in which they occur.
(i) Intangible assets:
Acquired intangible assets are primarily software, customer relationships, brands and technologies. Intangible assets
acquired separately are initially recorded at fair market value and subsequently at cost less accumulated amortization and
impairment losses. The useful lives of intangible assets are assessed as either finite or indefinite.
Intangible assets with finite lives are amortized over their useful economic lives, ranging from 1 to 15 years, on a
straight-line basis. Intangible assets with finite lives are assessed for impairment whenever there is an indication that the
intangible asset may be impaired. The amortization period and the amortization method for an intangible asset with a
finite useful life are reviewed at least at the end of each reporting period. Changes in the expected useful life or the
expected pattern of consumption of future economic benefits embodied in the asset are accounted for by changing the
amortization period or method, as appropriate, and are treated as a change in accounting estimate. The amortization
expense on intangible assets with finite lives is recognized in the consolidated statements of income in the expense
category consistent with the function of the intangible assets.
Intangible assets with indefinite useful lives are not amortized. The Company assesses the indefinite life at each
reporting date to determine if there is an indication that an intangible asset may be impaired. If any indication exists, or
when annual impairment testing for the intangible asset is required, the Company estimates the recoverable amount at
the CGU level to determine whether the indefinite life continues to be supportable. If not, the change in useful life from
indefinite to finite is made on a prospective basis. An asset is impaired when the recoverable amount is less than its
carrying amount. The recoverable amount is the higher of an asset’s fair value less costs to sell or its value in use.
Impairment losses relating to intangible assets are evaluated for potential reversals when events or changes in
circumstances warrant such consideration.
Gains or losses arising from derecognition of an intangible asset are measured as the difference between the net
disposal proceeds and the carrying amount of the asset and are recognized in the consolidated statements of income
when the asset is derecognized.
Research and development expenditures
Research costs are expensed as incurred. Development expenditures on an individual project are recognized as an
intangible asset only when the following conditions are demonstrated:
• The technical feasibility of completing the intangible asset so that it will be available for use or sale;
• The Company’s intention to complete and its ability to use or sell the intangible asset;
• How the asset will generate future economic benefits;
• The availability of resources to complete the intangible asset; and
• The ability to measure the expenditures reliably during development.
Following initial recognition of the development expenditure as an asset, the cost model is applied, requiring the asset
to be carried at cost less any accumulated amortization and accumulated impairment losses. Amortization of the asset
begins when development is complete and the asset is available for use. It is amortized over the period of expected
future benefit. In the event that a product program for which costs have been deferred is modified or cancelled, the
Company will assess the recoverability of the deferred costs and, if considered unrecoverable, will expense the costs in
the period the assessment is made.
7 0
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (j) Financial instruments:
Recognition
Financial assets and financial liabilities are recognized on the consolidated statements of financial position when the
Company becomes a party to the contractual provisions of the instrument.
Classification
The Company classifies its financial assets and financial liabilities in the following measurement categories: amortized
cost, fair value through profit or loss (“FVTPL”), fair value through other comprehensive income (“FVTOCI”), or derivatives
designated as a hedging instrument in an effective hedge. The classification of financial assets depends on the business
model for managing the financial assets and the contractual terms of the cash flows. Financial assets are measured at
amortized cost where the business model is to hold the financial asset to collect its contractual cash flows.
Financial liabilities are classified to be measured at amortized cost, derivatives designated as a hedging instrument in an
effective hedge, or they are designated to be measured subsequently at FVTPL. For assets and liabilities measured at fair
value, gains and losses are either recorded in profit or loss or other comprehensive income.
The Company reclassifies financial assets when and only when its business model for managing those assets changes.
Financial liabilities are not reclassified.
The Company classifies and measures financial assets (excluding derivatives) on initial recognition as described below:
• Cash and cash equivalents and restricted cash are classified as and measured at amortized cost.
• Accounts receivable are classified as and measured at amortized cost using the effective interest rate method, less
any impairment allowance. Accounts receivable are held within a hold-to-collect business model. The Company does
not factor or sell any of its trade receivables.
Accounts payable and accrued liabilities, bank indebtedness, and long-term debt are classified as other financial liabilities
and are measured at amortized cost using the effective interest rate method.
Measurement
All financial instruments are initially measured at fair value. Transaction costs that are directly attributable to the
acquisition or issuance of financial instruments classified as amortized cost are included with the carrying value of such
instruments. Transaction costs directly attributable to the acquisition of financial instruments classified as FVTPL are
recognized immediately in profit or loss.
Financial assets that are held within a business model whose objective is to collect the contractual cash flows, and that
have contractual cash flows that are solely payments of principal and interest on the principal amounts outstanding, are
generally measured at amortized cost at the end of the subsequent accounting periods. All other financial assets
including equity investments are measured at fair value at the end of subsequent accounting periods, with changes
recognized in profit or loss or other comprehensive income (irrevocable election at the time of recognition). Designation at
FVTOCI is not permitted if the equity investment is held for trading. The cumulative fair value gain or loss will not be
reclassified to profit or loss on the disposal of the investments.
Derecognition
A financial asset is derecognized when the rights to receive cash flows from the asset have expired or the Company has
transferred its rights to receive cash flows from the asset or has assumed an obligation to pay the received cash flows in
full without material delay to a third party under a “pass-through” arrangement, and either the Company has transferred
substantially all the risks and rewards of the asset, or ATS has neither transferred nor retained substantially all the risks
and rewards of the asset, but has transferred control of the asset.
A financial liability is derecognized when the obligation under the liability is discharged, cancelled or expired. When an
existing financial liability is replaced by another from the same lender on substantially different terms, or the terms of an
existing liability are substantially modified, such an exchange or modification is treated as a derecognition of the original
liability and the recognition of a new liability, and the difference in the respective carrying amounts is recognized in the
consolidated statements of income.
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ATS AUTOMATION /// ANNUAL REPORT 2022 Impairment
The Company recognizes expected credit losses for trade receivables and contract assets based on the simplified
approach under IFRS 9. The simplified approach to the recognition of expected losses does not require the Company to
track the changes in credit risk; rather, the Company recognizes a loss allowance based on lifetime expected credit losses
at each reporting date from the date of recognizing the trade receivable and contract asset.
Expected credit losses are measured as the difference in the present value of the contractual cash flows that are due to the
Company under the contract, and the cash flows that the Company expects to receive. The Company assesses all information
available, including past due status, credit ratings, the existence of third-party insurance, and forward-looking macroeconomic
factors in the measurement of the expected credit losses associated with its assets carried at amortized cost.
Customer credit risk is managed according to established policies, procedures and controls. Customer credit quality is
assessed in line with credit rating criteria. Outstanding customer balances are monitored for evidence of customer
financial difficulties including payment default and technical disputes on the contract. Significant balances are reviewed
individually while smaller balances are grouped and assessed collectively. The Company considers the aging of past due
receivables along with known project technical disputes a primary consideration in assessing credit risk.
The Company measures expected credit loss by considering the risk of default over the contract period and incorporates
forward-looking information into its measurement. A financial asset, subject to other considerations, is generally
considered in default when contractual payments are 90 days past due, which was determined based on historical
collection rates. A financial asset may also be considered to be in default if observable internal or external data indicates
a measurable decrease in expected cash flows that the Company is expected to receive, including the existence of a
technical dispute.
Financial assets are written off when there is no reasonable expectation of recovery. Trade receivables and contract
assets are reviewed on a case-by-case basis to determine whether they are impaired. Evidence of impairment may include
indications that a debtor or a group of debtors is experiencing significant financial difficulty, default or delinquency in
interest or principal payments, the probability that they will enter bankruptcy or other financial reorganization and where
observable data indicates that there is a measurable decrease in the estimated future cash flows, such as changes in
arrears or economic conditions that correlate with defaults. Trade receivables and contract assets are reviewed
qualitatively on a case-by-case basis to determine whether they need to be written off. An allowance is set up to reduce
the financial asset balance to its estimated realizable value when the amount is not considered to be collectible in full.
Once it is confirmed that the reserved amount is uncollectible, the amount may be written off and removed from the
financial asset and reserve. Where trade receivables and contract assets have been written off, the Company continues
to engage to recover the financial asset. Where recoveries are made, these are recognized in profit or loss.
There has been no change to the estimation techniques or significant assumptions used in the impairment of financial
instruments policy.
Fair value of financial instruments
The Company primarily applies the market approach for recurring fair value measurements. Three levels of inputs may be
used to measure fair value:
Level 1 – unadjusted quoted prices in active markets for identical assets or liabilities
Level 2 – inputs other than quoted prices included in Level 1 that are observable or can be corroborated by
observable market data
Level 3 – unobservable inputs that are supported by no market activity
7 2
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(k) Derivative financial instruments and hedge accounting:
The Company may use derivative financial instruments such as forward foreign exchange contracts and cross-currency
interest rate swaps to hedge its foreign currency risk. The Company designates certain derivative financial instruments as
either fair value hedges, cash flow hedges or hedges of net investments in foreign operations.
Derivative financial instruments are initially recognized at fair value on the date on which a derivative contract is entered
into and are subsequently remeasured at fair value. The accounting for subsequent changes in fair value depends on
whether the derivative is designated as a hedging instrument, and if so, the nature of the item being hedged and the type
of hedge relationship designated. At the inception of the hedging relationship, the Company documents the economic
relationship between the hedging instrument and the hedged item including whether the hedging instrument is expected
to offset changes in cash flows of hedged items. At the inception of each hedging relationship, the Company documents
its risk management objective, its strategy for undertaking various hedge transactions and how the Company will assess
the hedging instrument’s effectiveness in offsetting changes in fair value or cash flows of the hedged item attributable to
the hedged risk. The hedges are expected to be highly effective in achieving offsetting changes in fair value or cash flows
and are assessed on an ongoing basis to determine whether they have actually been highly effective throughout the
financial reporting periods for which they were designated.
Hedges that meet the criteria for hedge accounting are accounted for as follows:
Cash flow hedges
The effective portion of changes in the fair value of derivatives that are designated and qualify as cash flow hedges is
recognized in other comprehensive income and accumulated under the heading of cash flow reserve, while any ineffective
portion is recognized immediately in the consolidated statements of income.
Amounts recognized in other comprehensive income and accumulated in equity are transferred to the consolidated
statements of income when the hedged item is recognized in profit or loss. These earnings are included within the same
line of the consolidated statements of income as the hedged item. Where the hedged item is the cost of a non-financial
asset or non-financial liability, the amounts recognized in other comprehensive income are transferred at the initial
carrying amount of the non-financial asset or liability.
If the forecasted transaction or firm commitment is no longer expected to occur, the cumulative gain or loss previously
recognized in equity is transferred to the consolidated statements of income. If the hedging instrument expires or is sold,
terminated or exercised without replacement or rollover, any cumulative gain or loss previously recognized in other
comprehensive income remains in other comprehensive income until the forecasted transaction or firm commitment
affects profit or loss.
The Company uses forward foreign exchange contracts as hedges of its exposure to foreign currency risk on anticipated
revenues or costs, and cross-currency interest rate swap contracts as hedges of its exposure to foreign currency-denominated
Senior Notes. The Company may use interest rate swap contracts to reduce its exposure to floating interest rates.
Hedges of net investments
Hedges of net investments in a foreign operation, including a hedge of a monetary item that is accounted for as part of
the net investment, are accounted for in a way similar to cash flow hedges. Gains or losses on the hedging instrument
related to the effective portion of the hedge are recognized in other comprehensive income while any gains or losses
related to the ineffective portion are recognized in the consolidated statements of income. On disposal of the foreign
operation, the cumulative value of any such gains or losses recorded in equity is transferred to the consolidated
statements of income. The Company uses cross-currency interest rate swap contracts as a hedge of its exposure to
foreign exchange risk on its investments in foreign subsidiaries.
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ATS AUTOMATION /// ANNUAL REPORT 2022 Put options
Where the Company has issued put options over shares held by a non-controlling interest, the Company recognizes a
financial liability for the estimated exercise value of the option. Changes in the estimated liability after initial recognition
are recognized in the consolidated statements of income.
In order to determine the corresponding entry to reflect the aforementioned financial liability, it is necessary to consider
whether, as part of the conditions to exercise the puttable financial instrument, the risks and benefits deriving from
ownership of the minority interest are transferred to the controlling company or remain with the owners of the minority
interest, as this will determine whether the minority interests subject to the put option are required to be reported. If the
risks and benefits are not transferred to the controlling company by the puttable option, the minority interests subject to
the put option require reporting. If, on the other hand, such risks and benefits are transferred, the minority interests need
to be recognized in the consolidated financial statements.
Considering the above:
• If the minority interests do not need to be recognized in the financial statements as the related risks and benefits have
transferred to the controlling company, the liability related to the put option will be reflected:
i)
in goodwill, if the put option was granted to the seller in the context of a business combination; or
ii)
against equity attributable to the minorities, in the case in which the contract was entered into outside
such context.
• If the risks and benefits have not transferred, the corresponding entry will be equity attributable to the owners of
the Company.
(l) Inventories:
Inventories are stated at the lower of cost and net realizable value on a first-in, first-out basis. The cost of raw materials
includes purchase cost and costs incurred in bringing each product to its present location and condition. The cost of work
in progress and finished goods includes cost of raw materials, labour and related manufacturing overhead, excluding
borrowing costs, based on normal operating capacity. Cost of inventories includes the transfer from equity of gains and
losses on qualifying cash flow hedges in respect of the purchase of raw materials. Net realizable value is the estimated
selling price in the ordinary course of business, less estimated costs of completion and the estimated costs necessary to
make the sale.
(m) Impairment of non-financial assets:
The Company assesses at each reporting date whether there is an indication that an asset may be impaired. If any
indication exists, or when annual impairment testing for an asset is required, the Company estimates the asset’s
recoverable amount. An asset’s recoverable amount is the higher of an asset’s or CGU’s fair value less costs to sell and
its value in use. It is determined for an individual asset, unless the asset does not generate cash inflows that are largely
independent of those from other assets or groups of assets. Where the carrying amount of an asset or CGU exceeds its
recoverable amount, the asset is considered impaired and is written down to its recoverable amount. In assessing value
in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects
current market assessments of the time value of money and the risks specific to the asset. In determining fair value less
costs to sell, recent market transactions are taken into account, if available. If no such transactions can be identified, an
appropriate valuation model is used. These calculations are corroborated by valuation multiples, quoted share prices for
publicly traded subsidiaries or other available fair value indicators.
Impairment losses, including impairment on inventories, are recognized in the consolidated statements of income in those
expense categories consistent with the function of the impaired asset.
7 4
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(n) Provisions:
Provisions are recognized when: the Company has a present obligation (legal or constructive) as a result of a past event;
it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation; and a
reliable estimate can be made of the amount of the obligation. Where the Company expects some or all of a provision to
be reimbursed, for example under an insurance contract, the reimbursement is recognized as a separate asset, but
only when the reimbursement is virtually certain. The expense relating to any provision is presented in the consolidated
statements of income net of any reimbursement. If the effect of the time value of money is material, provisions are
discounted using a current pre-tax rate that reflects, where appropriate, the risks specific to the liability. Where
discounting is used, the increase in the provision due to the passage of time is recognized as a finance cost.
Warranty provisions
Provisions for warranty-related costs are recognized when the product is sold or the service provided. Initial recognition is
based on historical experience and specific known risks. The initial estimate of warranty-related costs is reviewed at the
end of each reporting period and adjusted to reflect the current best estimate.
Restructuring provisions
Restructuring provisions are only recognized when general recognition criteria for provisions are fulfilled. Additionally, the
Company needs to have in place a detailed formal plan about the business or part of the business concerned, the
location and number of employees affected, a detailed estimate of the associated costs and the appropriate timeline.
The people affected have a valid expectation that the restructuring is being carried out or the implementation has been
initiated already.
(o) Employee benefits:
The Company operates pension plans in accordance with the applicable laws and regulations in the respective countries
in which the Company conducts business. The pension benefits are provided through defined benefit and defined
contribution plans. The cost of providing benefits under the defined benefit plans is determined separately for each plan
using the projected unit credit method, pro-rated on length of service and management’s best estimate assumptions to
value its pensions using a measurement date of March 31. Actuarial gains and losses arising from experience
adjustments and changes in actuarial assumptions are recognized in the period in which they occur in other comprehensive
income. Net interest is calculated by applying the discount rate to the net defined benefit liability or asset and is
recognized in selling, general and administrative expenses in the consolidated statements of income. The past service
costs are recognized immediately in profit or loss as an expense.
The defined benefit asset or liability comprises the present value of the defined benefit obligation using the current
interest rate at the reporting date on high-quality fixed-income investments with maturities that match the expected
maturities of the obligation, less the fair value of plan assets out of which the obligations are to be settled. Plan assets
are assets that are held by a long-term employee benefit fund or qualifying insurance policies. Fair value is based on
market price information, and in the case of quoted securities, it is the published bid price. The value of any defined
benefit asset recognized is restricted to the sum of any past service costs and actuarial gains and losses not yet
recognized and the present value of any economic benefits available in the form of refunds from the plan or reductions in
the future contributions to the plan.
The accounting method for other long-term employee benefit plans is similar to the method used for defined benefit plans,
except that all actuarial gains and losses are recognized immediately in the consolidated statements of income.
(p) Stock-based payments:
The Company operates both equity-settled and cash-settled stock-based compensation plans under which the entity
receives services from employees as consideration for equity instruments (options) of the Company or cash payments.
For equity-settled plans, namely the Employee Share Purchase Plan and the Stock Option Plan, the fair value determined
at the grant date is expensed on a proportionate basis consistent with the vesting features of each grant and
incorporates an estimate of the number of equity instruments that will ultimately vest. The total amount to be expensed is
determined by reference to the fair value of the stock options granted, excluding the impact of any non-market service and
performance vesting conditions (for example, profitability, sales growth targets and remaining an employee of the entity
over a specified time period).
75
ATS AUTOMATION /// ANNUAL REPORT 2022 At the end of each reporting period, the Company revises its estimate of the number of equity instruments expected to
vest based on the non-market vesting conditions. The impact of the revision of the original estimates, if any, is recognized
in the consolidated statements of income with a corresponding adjustment to equity. The proceeds received are credited
to share capital and share premiums when the stock options are exercised.
For cash-settled plans, namely the Deferred Stock Unit Plan and the Restricted Share Units, the expense is determined
based on the fair value of the liability incurred at each award date and at each subsequent consolidated statement of
financial position date until the award is settled. The fair value of the liability is measured by applying quoted market prices.
Changes in fair value are recognized in the consolidated statements of income in stock-based compensation expense.
(q) Standard adopted in fiscal 2022:
The Company has not adopted any standard, interpretation or amendment that had or is expected to have an impact on
the Company.
(r) Amendments issued but not yet effective:
A number of amendments to standards have been issued but are not yet effective for the financial year ended
March 31, 2022, and accordingly, have not been applied in preparing these consolidated financial statements.
The Company reviewed these amendments and concluded that there would be no impact on adoption given their
nature and applicability.
4. Critical Accounting Estimates and Assumptions
The preparation of the Company’s consolidated financial statements requires management to make estimates, judgments
and assumptions that affect the reported amounts of assets, liabilities, revenues and expenses, and the disclosure of
contingent assets and liabilities at the end of the reporting period. However, uncertainty about these estimates,
judgments and assumptions could result in outcomes that require a material adjustment to the carrying amount of the
asset or liability affected in future periods. The Company based its estimates, judgments and assumptions on parameters
available when the consolidated financial statements were prepared. Existing circumstances and assumptions about
future developments, however, may change due to market changes or circumstances arising beyond the control of the
Company. Such changes are reflected in the estimates when they occur.
The following are the critical judgments, estimates and assumptions that have been made in applying the Company’s
accounting policies and that have the most significant effect on the amounts in the consolidated financial statements:
(a) COVID-19:
There is significant uncertainty regarding the extent and duration of the impact of the COVID-19 pandemic on the
Company’s operations. The impact of the pandemic on the Company’s financial condition, cash flows, operations, credit
risk, liquidity and availability of credit is highly uncertain and cannot be predicted. Management will continue to monitor
and assess the impact of the pandemic on its judgments, estimates, accounting policies and amounts recognized in
these consolidated financial statements.
The Company tests for impairment on an annual basis and if there are indicators that impairment may have arisen. In
calculating the recoverable amount for impairment testing, management is required to make several assumptions,
including, but not limited to, expected future revenues, expected future cash flows and forward multiples. COVID-19
presents significant measurement uncertainties associated with the assumptions about the Company’s future operating
results used in calculating the recoverable amount for impairment testing at March 31, 2022.
In response to the COVID-19 pandemic, the Government of Canada announced the Canada Emergency Wage Subsidy
(“CEWS”) in April 2020. For the year ended March 31, 2022, the Company received payments of $601 under the CEWS
program (March 31, 2021 – $16,162), of which $473 was included in cost of revenues (March 31, 2021 – $12,241) and
$128 (March 31, 2021 – $3,921) was included in selling, general and administrative expenses in the consolidated
financial statements.
7 6
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (b) Revenue recognition and contracts in progress:
Revenues from construction contracts are recognized on a percentage of completion basis as outlined in note 3(c)
“Revenue.” In applying the accounting policy on construction contracts, judgment is required in determining the expected
profitability of the contract and the estimated costs to complete a contract. These factors are reviewed at each reporting
period and by their nature may give rise to income volatility.
(c) Income taxes:
Income tax assets and liabilities are measured at the amount that is expected to be realized or incurred upon ultimate
settlement with taxation authorities. Such assessments are based upon the applicable income tax legislation, regulations
and interpretations, all of which may be subject to change and interpretation. Investment tax credit assets, disclosed in
note 18, are recognized as a reduction of the related expenses in the year in which the expenses are incurred, provided
there is reasonable assurance that the credits will be realized. Management has made estimates and assumptions in
determining the expenditures eligible for the investment tax credits claim and the amount could be materially different
from the recorded amount upon review by the government. Deferred income tax assets, disclosed in note 18, are
recognized to the extent that it is probable that taxable income will be available against which the losses can be utilized.
Significant management judgment is required to determine the amount of deferred income tax assets that can be
recognized based upon the likely timing and level of future taxable income together with future tax planning strategies.
If the assessment of the Company’s ability to utilize the deferred income tax asset changes, the Company would be
required to recognize more or fewer deferred income tax assets, which would increase or decrease income tax expense in
the period in which this is determined. The Company establishes provisions based on reasonable estimates for possible
consequences of audits by the tax authorities of the respective countries in which it operates. The amount of such
provisions is based on various factors, such as experience of previous taxation audits and differing interpretations of tax
regulations by the taxable entity and the respective tax authority. These provisions for uncertain tax positions are made
using the best estimate of the amount expected to be paid based on a qualitative assessment of all the relevant factors.
The Company reviews the adequacy of these provisions at each quarter; however, it is possible that at some future date
an additional liability could result from audits by the taxation authorities. Where the final tax outcome of these matters is
different from the amount initially recorded, such differences will affect the tax provisions in the period in which such
determination is made.
(d) Stock-based payment transactions:
The Company measures the cost of transactions with employees by reference to the fair value of the equity instruments.
Estimating fair value for stock-based payment transactions requires the determination of the most appropriate valuation
model, which is dependent on the terms and conditions of the grant. This estimate also requires determining the most
appropriate inputs to the valuation model including the future forfeiture rate, the expected life of the share option,
weighted average risk-free interest rate, volatility and dividend yield and making assumptions about them. The assumptions
and models used for estimating fair value for stock-based payment transactions are disclosed in note 19.
(e) Employee benefits:
The cost of defined benefit pension plans, the cost of other long-term employee benefit plans and the present value of
the pension obligations are determined using actuarial valuations. An actuarial valuation involves making various
assumptions that may differ from actual developments in the future. These include the determination of the discount
rate, future salary increases, mortality rates and future pension increases. Due to the complexity of the valuation, the
underlying assumptions and its long-term nature, a defined benefit obligation is highly sensitive to changes in these
assumptions. All assumptions are reviewed at each reporting date.
In determining the appropriate discount rate, management considers the interest rates of corporate bonds in the
respective currency, with extrapolated maturities corresponding to the expected duration of the defined benefit obligation.
The mortality rate is based on publicly available mortality tables for the specific country. Future salary increases and
pension increases are based on expected future inflation rates for the respective country.
Further details about the assumptions used are provided in note 15.
77
ATS AUTOMATION /// ANNUAL REPORT 2022 (f) Fair value measurement:
Acquisitions that meet the definition of a business combination require the Company to recognize the assets acquired
and liabilities assumed at their fair value on the date of the acquisition. The calculation of fair value of the assets and
liabilities may require the use of estimates and assumptions, based on discounted cash flows, market information and
using independent valuations and management’s best estimates.
5. Acquisitions
(i) On December 3, 2021, the Company completed its acquisition of 100% of the shares of SP Industries, Inc. (“SP”), a
designer and manufacturer of high-grade biopharma processing equipment, life sciences equipment and lab apparatus
products. The total purchase price paid upon finalization of working capital adjustments was $583,927 ($454,878 U.S.).
Cash used in investing activities was determined as follows:
Cash consideration
Less: cash acquired
The allocation of the purchase price at fair value is as follows:
Purchase price allocation
Cash
Other current assets
Property, plant and equipment
Right-of-use assets
Intangible assets with a definite life
Technology
Customer relationships
Other
Intangible assets with an indefinite life
Brand
Current liabilities
Other long-term liabilities
Deferred income tax liability
Net identifiable assets
Residual purchase price allocated to goodwill
Purchase consideration
$
$
$
$
$
583,927
(12,902)
571,025
12,902
94,155
26,676
9,430
90,501
80,360
11,852
68,550
(60,552)
(8,013)
(62,138)
263,723
320,204
583,927
Current assets include accounts receivable of $29,936, representing gross contractual amounts receivable of $31,384
less management’s best estimate of the contractual cash flows not expected to be collected of $1,448.
The primary factors that contributed to a residual purchase price that resulted in the recognition of goodwill are: the
acquired workforce; access to growth opportunities in new markets and with existing customers; and the combined
strategic value to the Company’s growth plan. The amounts assigned to goodwill and intangible assets are not expected
to be deductible for tax purposes. This acquisition was accounted for as a business combination with the Company as
the acquirer of SP. The purchase method of accounting was used and the earnings were consolidated from the acquisition
date, December 3, 2021. SP contributed approximately $75,153 in revenue and $15,293 in net loss from the acquisition
date, December 3, 2021 to March 31, 2022. If SP had been acquired at the beginning of ATS’ fiscal year (April 1, 2021),
the Company estimates that revenues and net income of the combined SP and ATS entity for the fiscal year ended
March 31, 2022 would have been approximately $150,306 higher and $30,587 lower, respectively.
(ii) On September 1, 2021, the Company completed its acquisition of 100% of the shares of NCC Automated Systems,
Inc. (“NCC”), a provider of engineered to order sanitary automation solutions and stand-alone precision conveyance
equipment. The total purchase price was $56,878 ($45,059 U.S.). Cash consideration paid in the second quarter of
fiscal 2022 was $55,956 ($44,329 U.S.), which does not include cash acquired of $6,277 ($4,973 U.S.). The balance
is related to the fair value of an earn-out to be paid within two fiscal years of the acquisition date if certain performance
targets are met.
7 8
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Cash used in investing activities was determined as follows:
Cash consideration
Less: cash acquired
The allocation of the purchase price at fair value is as follows:
Purchase price allocation
Cash
Other current assets
Property, plant and equipment
Intangible assets with a definite life
Technology
Customer relationships
Other
Intangible assets with an indefinite life
Brand
Current liabilities
Deferred income tax liability
Other long-term liabilities
Net identifiable assets
Residual purchase price allocated to goodwill
$
$
$
$
$
55,956
(6,277)
49,679
6,277
13,245
6,797
4,418
15,021
1,369
3,282
(10,283)
(5,798)
(105)
34,223
22,655
56,878
Current assets include accounts receivable of $6,617, representing the fair value of accounts receivable expected
to be collected.
The primary factors that contributed to a residual purchase price that resulted in the recognition of goodwill are: the
acquired workforce; access to growth opportunities in new markets and with existing customers; and the combined
strategic value to the Company’s growth plan. The amounts assigned to goodwill and intangible assets are not expected
to be deductible for tax purposes. This acquisition was accounted for as a business combination with the Company as the
acquirer of NCC. The purchase method of accounting was used and the earnings were consolidated from the acquisition
date, September 1, 2021. NCC contributed approximately $21,997 in revenue and $2,384 in net loss from the
acquisition date, September 1, 2021 to March 31, 2022. If NCC had been acquired at the beginning of ATS’ fiscal year
(April 1, 2021), the Company estimates that revenues and net income of the combined NCC and ATS entity for the fiscal
year ended March 31, 2022 would have been approximately $15,712 higher and $1,703 lower, respectively.
(iii) On June 1, 2021, the Company completed its acquisition of 100% of the shares of BioDot, Inc. (“BioDot”), a leading
manufacturer of automated fluid dispensing systems. The total purchase price paid upon finalization of working capital
adjustments was $107,061 ($88,693 U.S.).
79
ATS AUTOMATION /// ANNUAL REPORT 2022 Cash used in investing activities was determined as follows:
Cash consideration
Less: cash acquired
The allocation of the purchase price at fair value is as follows:
Purchase price allocation
Cash
Other current assets
Property, plant and equipment
Right-of-use assets
Intangible assets with a definite life
Technology
Customer relationships
Other
Intangible assets with an indefinite life
Brand
Current liabilities
Deferred income tax liability
Other long-term liabilities
Net identifiable assets
Residual purchase price allocated to goodwill
Total net identifiable assets acquired
Less: Non-controlling interests
Purchase consideration
$
$
$
$
$
$
107,061
(6,918)
100,143
6,918
27,653
241
1,281
6,398
46,473
3,750
10,019
(15,532)
(18,038)
(920)
68,243
38,823
107,066
5
107,061
Current assets include accounts receivable of $10,166, representing the fair value of accounts receivable expected
to be collected.
The primary factors that contributed to a residual purchase price that resulted in the recognition of goodwill are: the
acquired workforce; access to growth opportunities in new markets and with existing customers; and the combined
strategic value to the Company’s growth plan. The amounts assigned to goodwill and intangible assets are not expected
to be deductible for tax purposes. This acquisition was accounted for as a business combination with the Company as the
acquirer of BioDot. The purchase method of accounting was used and the earnings were consolidated from the acquisition
date, June 1, 2021. BioDot contributed approximately $51,661 in revenue and $6,061 in net income from the acquisition
date, June 1, 2021 to March 31, 2022. If BioDot had been acquired at the beginning of ATS’ fiscal year (April 1, 2021),
the Company estimates that revenues and net income of the combined BioDot and ATS entity for the fiscal year ended
March 31, 2022 would have been approximately $10,332 and $1,212 higher, respectively.
(iv) On June 2, 2021, the Company completed its acquisition of 100% of the shares of Control and Information
Management Ltd. (“CIM”), an industrial automation system integrator based in Ireland. The total purchase price paid in
the first quarter of fiscal 2022 was $19,748 (13,405 Euros).
On August 6, 2021, the Company completed its acquisition of 100% of the shares of BLSG AG. (“BLSG”), a consulting
company specializing in process engineering and operational excellence. The total purchase price paid in the second
quarter of fiscal 2022 was $1,813 (1,227 Euros).
On November 30, 2021, the Company completed its acquisition of 100% of the shares of DF S.r.l. (“DF”), a specialized
manufacturer of pharmaceutical processing and packaging equipment and systems. The total purchase price was
$13,248 (9,147 Euros). Cash consideration paid in the third quarter of fiscal 2022 was $11,437 (7,897 Euros). Included
in the purchase price is contingent consideration of up to $1,811 (1,250 Euros) which is payable if certain performance
targets are met within one year of the acquisition date.
On December 30, 2021, the Company completed its acquisition of 100% of the shares of HSG Engineering S.r.l. (“HSG”),
an independent provider of complete automation solutions for the process and manufacturing industries. The total
purchase price was $17,177 (11,906 Euros). Cash consideration paid in the fourth quarter of fiscal 2022 was $5,194
(3,600 Euros). Upon finalization of the working capital $6,356 (4,406 Euros) was paid in the first quarter of fiscal 2023.
The purchase price includes deferred consideration of $5,627 (3,900 Euros) to be paid within 48 months of the
acquisition date.
8 0
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Cash used in investing activities for the four acquisitions was determined as follows:
Cash consideration
Less: cash acquired
The allocation of the purchase price at fair value for the four acquisitions is as follows:
Purchase price allocation
Cash
Other current assets
Property, plant and equipment
Right-of-use assets
Intangible assets with a definite life
Technology
Customer relationships
Other
Brand
Current liabilities
Deferred income tax liability
Other long-term liabilities
Net identifiable assets
Residual purchase price allocated to goodwill
$
$
$
$
$
38,192
(14,021)
24,171
14,021
14,575
425
227
10,898
2,515
330
5,030
(10,719)
(4,114)
(1,029)
32,159
19,827
51,986
Current assets include accounts receivable of $11,075, representing the fair value of accounts receivable expected
to be collected.
The primary factors that contributed to a residual purchase price that resulted in the recognition of goodwill are: the
acquired workforce; access to growth opportunities in new markets and with existing customers; and the combined
strategic value to the Company’s growth plan. The amounts assigned to goodwill and intangible assets are not expected
to be deductible for tax purposes. These acquisitions were accounted for as a business combination with the Company
as the acquirer of CIM, BLSG, DF and HSG. The purchase method of accounting was used with an acquisition date of
June 2, 2021 for CIM, August 6, 2021 for BLSG, November 30, 2021 for DF, and December 30, 2021 for HSG.
(v) On March 12, 2021, the Company announced results for the voluntary tender offer to acquire 100% of the outstanding
shares and voting rights of CFT. As a result of the tender offer and subsequent shareholder approval, the Company acquired
97% of CFT’s outstanding shares. CFT is a global supplier of automated processing and packaging equipment to the food &
beverage equipment market. The total purchase price paid in the fourth quarter of fiscal 2021 was $127,181 (85,413 Euros),
which does not include debt of $119,120 (80,000 Euros) which was repaid subsequent to the acquisition date. During the
year ended March 31, 2022, changes to the purchase price allocation resulted in increases to working capital of $3,471,
intangible assets of $17,719, the deferred tax liability of $4,586, other long-term liabilities of $3,797, non-controlling
interest of $2,300 and decreases in property, plant and equipment of $11,023 and goodwill of $4,084.
During the three months ended December 26, 2021, the Company acquired the minority interest of two CFT subsidiaries,
increasing its ownership from 75% to 100% in each of the subsidiaries. Cash consideration paid in the third quarter of
fiscal 2022 was $14,690 (10,070 Euros).
During the three months ended March 31, 2022, the Company paid $23,098 (16,700 Euros) to settle a put option liability
which was issued to a minority shareholder of a CFT subsidiary.
81
ATS AUTOMATION /// ANNUAL REPORT 2022 Cash used in investing activities was determined as follows:
Cash consideration
Less: cash acquired
The allocation of the purchase price at fair value is as follows:
Purchase price allocation
Cash
Other current assets
Property, plant and equipment
Right-of-use assets
Intangible assets with a definite life
Technology
Customer relationships
Other
Intangible assets with an indefinite life
Brand
Current liabilities
Debt
Deferred income tax liability
Other long-term liabilities
Net identifiable assets
Residual purchase price allocated to goodwill
Total net identifiable assets acquired
Less: Non-controlling interests
Purchase consideration
$
$
$
$
$
$
127,181
(61,708)
65,473
61,708
179,913
51,804
23,123
57,922
11,763
6,682
23,675
(179,719)
(119,120)
(17,708)
(50,006)
50,037
91,441
141,478
14,297
127,181
Current assets include accounts receivable of $76,137, representing the fair value of accounts receivable expected
to be collected.
The primary factors that contributed to a residual purchase price that resulted in the recognition of goodwill are: the
acquired workforce; access to growth opportunities in new markets and with existing customers; and the combined
strategic value to the Company’s growth plan. The amounts assigned to goodwill and intangible assets are not expected
to be deductible for tax purposes. This acquisition was accounted for as a business combination with the Company as the
acquirer of CFT. The purchase method of accounting was used and the earnings were consolidated from March 31, 2021.
(vi) On November 24, 2020, the Company completed its acquisition of 100% of the shares of Inimco CV (“Inimco”). Inimco
is a Belgium-based company that offers knowledge, resources and loT-based solutions for the process and manufacturing
industry on MS Azure and equivalent platforms. The total purchase price was $5,441 (3,519 Euros). Cash consideration
paid in the third quarter of fiscal 2021 was $3,895 (2,519 Euros). Included in the purchase price is contingent
consideration of up to $1,546 (1,000 Euros) which is payable if certain performance targets are met within three fiscal
years of the acquisition date.
Cash used in investing activities was determined as follows:
Cash consideration
Less: cash acquired
$
$
3,895
(845)
3,050
8 2
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS The allocation of the purchase price at fair value is as follows:
Purchase price allocation
Cash
Other current assets
Property, plant and equipment
Intangible assets with a definite life
Technology
Other
Brands
Current liabilities
Long-term debt
Deferred income tax liability
Net identifiable assets
Residual purchase price allocated to goodwill
$
$
$
845
603
50
1,392
160
464
(303)
(51)
(464)
2,696
2,745
5,441
Current assets include accounts receivable of $591, representing gross contractual amounts receivable of $591 less
management’s best estimate of the contractual cash flows not expected to be collected of $nil.
The primary factors that contributed to a residual purchase price that resulted in the recognition of goodwill are: the
acquired workforce; access to growth opportunities in new markets and with existing customers; and the combined
strategic value to the Company’s growth plan. The amounts assigned to goodwill and intangible assets are not expected
to be deductible for tax purposes. This acquisition was accounted for as a business combination with the Company as the
acquirer of Inimco. The purchase method of accounting was used and the earnings were consolidated from the acquisition
date, November 24, 2020. Inimco contributed approximately $1,150 in revenue and $92 in net income during the
four months ended March 31, 2021. If Inimco had been acquired at the beginning of ATS’ fiscal year (April 1, 2020), the
Company estimates that revenues and net income of the combined Inimco and ATS entity for the year ending March 31,
2021 would have been approximately $3,450 and $275 higher, respectively.
6. Inventories
As at
Raw materials
Work in progress
Finished goods
March 31, 2022 March 31, 2021
$
$
103,978
76,880
27,015
207,873
$
$
58,133
67,002
12,876
138,011
The amount charged to net income and included in cost of revenues for the write-down of inventories for valuation issues
during the year ended March 31, 2022 was $1,843 (March 31, 2021 – $1,283). The amount of inventories carried at net
realizable value as at March 31, 2022 was $138 (March 31, 2021 – $132). For the year ended March 31, 2022, the
Company recognized expense related to cost of inventories of $792,617 (March 31, 2021 – $500,735), in cost of
revenues in the consolidated statements of income.
83
ATS AUTOMATION /// ANNUAL REPORT 2022 7. Deposits, Prepaids and Other Assets
As at
Prepaid assets
Supplier deposits
Current portion of investment tax credit receivable
Forward foreign exchange contracts
Note March 31, 2022 March 31, 2021
18
$
$
21,914
30,992
26,334
5,578
84,818
$
$
16,248
16,777
–
4,782
37,807
8. Right-of-Use Assets and Lease Liabilities
Changes in the net balance of right-of-use assets during the year ended March 31, 2022 and March 31, 2021
were as follows:
Balance, at March 31, 2020
Additions
Amortization
Acquisition of subsidiaries
Exchange and other adjustments
Balance, at March 31, 2021
Additions
Amortization
Acquisition of subsidiaries
Exchange and other adjustments
Balance, at March 31, 2022
Note
Buildings
Vehicles and
equipment
$
$
$
5
5
50,322
5,296
(10,497)
20,742
(4,846)
61,017
18,586
(15,621)
10,449
(4,926)
69,505
$
$
$
10,834
4,078
(5,614)
2,381
(126)
11,553
7,036
(6,581)
489
(713)
11,784
$
$
$
Total
61,156
9,374
(16,111)
23,123
(4,972)
72,570
25,622
(22,202)
10,938
(5,639)
81,289
Changes in the balance of lease liabilities during the year ended March 31, 2022 and March 31, 2021 were as follows:
Balance, at April 1
Additions
Interest
Payments
Acquisition of subsidiaries
Exchange and other adjustments
Balance, at March 31
Less: current portion
Note
5
2022
72,961
25,622
3,730
(23,277)
11,062
(7,278)
82,820
19,964
62,856
$
$
$
2021
62,905
9,374
2,820
(18,024)
21,338
(5,452)
72,961
15,197
57,764
$
$
$
The right-of-use assets and lease liabilities relate to leases of real estate properties, automobiles and other equipment.
For the year ended March 31, 2022, the Company recognized expense related to short-term and low-value leases of
$2,117 (March 31, 2021 – $2,308), in cost of revenues, and $1,778 (March 31, 2021 – $1,020), in selling, general and
administrative expenses in the consolidated statements of income.
The annual lease obligations for the next five years and thereafter are as follows:
As at
Less than one year
One – two years
Two – three years
Three – four years
Four – five years
Due in over five years
Total undiscounted lease liabilities
March 31, 2022
$
$
22,829
19,337
16,459
11,178
9,096
14,786
93,685
The Company does not face a significant liquidity risk in regard to its lease obligations.
8 4
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 9. Other Assets and Liabilities
Other assets consist of the following:
As at
Cross-currency interest rate swap instrument(i)
Other
Total
Other liabilities consist of the following:
As at
Cross-currency interest rate swap instrument(i)
Put option liability(ii)
Total
March 31, 2022 March 31, 2021
$
$
18,004
627
18,631
$
$
5,135
747
5,882
March 31, 2022 March 31, 2021
$
$
3,935
–
3,935
$
$
1,478
24,827
26,305
(i) Subsequent to March 31, 2022, on April 20, 2022, the Company settled the cross-currency interest rate swap instrument to swap U.S. $175,000 into
Canadian dollars that was outstanding on March 31, 2022. The Company received interest of 4.125% U.S. per annum and paid interest of 4.257%
Canadian. The Company also settled a cross-currency interest rate swap instrument to swap 143,855 Euros into Canadian dollars that was outstanding
on March 31, 2022. The Company received interest of 4.257% Canadian per annum and paid interest of 3.145% Euros. The Company received
$17,247 to settle the cross-currency swaps.
Subsequent to March 31, 2022, the Company entered into a cross-currency interest rate swap instrument on April 20, 2022, to swap U.S. $175,000
into Canadian dollars to hedge a portion of its foreign exchange risk related to its U.S. dollar-denominated Senior Notes. The Company will receive
interest of 4.125% U.S. per annum and pay interest of 4.169% Canadian. The terms of the hedging instrument will end on December 15, 2025.
Subsequent to March 31, 2022, the Company entered into a cross-currency interest rate swap instrument on April 20, 2022, to swap 161,142 Euros
into Canadian dollars. The Company will receive interest of 4.169% Canadian per annum and pay interest of 2.351% Euros. The terms of the hedging
relationship will end on December 15, 2025.
(ii) During the year ended March 31, 2022, the Company settled the put option liability which was issued to a minority shareholder of a CFT subsidiary.
The amount reported at March 31, 2021 represented the fair value of the exercise value of the option.
85
ATS AUTOMATION /// ANNUAL REPORT 2022
10. Property, Plant and Equipment
Note
Land
Buildings and
leaseholds
Production
equipment
Other
equipment
Total
Cost:
Balance, at March 31, 2020
Additions
Acquisition of subsidiaries
Disposals
Exchange and other adjustments
Balance, at March 31, 2021
Additions
Acquisition of subsidiaries
Disposals
Exchange and other adjustments
Balance, at March 31, 2022
Depreciation:
Balance, at March 31, 2020
Depreciation expense
Disposals
Exchange and other adjustments
Balance, at March 31, 2021
Depreciation expense
Disposals
Exchange and other adjustments
Balance, at March 31, 2022
Net book value:
At March 31, 2022
At March 31, 2021
$
29,303 $ 115,531 $
37
5,767
(1,479)
(1,816)
31,812 $ 142,804 $
11,208
26,664
(20,671)
10,072
1,072
2,947
–
(1,155)
34,676 $
18,096
18,911
(607)
(18,046)
161,158 $
17,217 $
2,678
10,942
(1,382)
(2,674)
26,781 $
5,900
6,505
(2,404)
528
37,310 $
68,683 $ 230,734
7,618
21,541
8,481
51,854
(8,747)
(32,279)
(14,724)
(20,306)
55,729 $ 257,126
36,309
11,241
34,139
5,776
(6,434)
(3,423)
(8,464)
10,209
312,676
79,532 $
Buildings and
leaseholds
Production
equipment
Other
equipment
Land
– $
–
–
–
– $
–
–
–
– $
(44,571) $
(4,423)
17,377
2,495
(29,122) $
(6,465)
227
700
(34,660) $
(9,133) $
(2,091)
1,260
2,128
(7,836) $
(4,902)
2,236
(730)
(11,232) $
(40,746) $
(8,306)
8,184
996
(39,872) $
(9,550)
3,154
1,607
(44,661) $
Total
(94,450)
(14,820)
26,821
5,619
(76,830)
(20,917)
5,617
1,577
(90,553)
34,676 $
126,498 $
31,812 $ 113,682 $
26,078 $
18,945 $
222,123
34,871 $
15,857 $ 180,296
5
5
$
$
$
$
$
$
$
Included in building and leaseholds as at March 31, 2021 was $7,587 (none at March 31, 2022) of assets that relate to
the expansion and improvement of certain manufacturing facilities and had not been depreciated. Included in other
equipment as at March 31, 2022 is $5,489 (March 31, 2021 – $2,353) of assets that are under construction and have
not been depreciated.
During the year ended March 31, 2021, the Company completed the sale of a building made redundant due to the
Company’s previously completed reorganization. The building had a net book value of $3,043, the Company received net
proceeds of $8,382 and recognized a gain of $5,339 in selling, general and administrative expenses in the consolidated
financial statements (see note 14).
8 6
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 11. Goodwill
The carrying amount of goodwill acquired through business combinations has been allocated to a group of CGUs that
combine to form a single operating segment, Automation Systems, as follows:
As at
Balance, at April 1
Acquisition of subsidiaries
Foreign exchange
Balance, at March 31
Note
5
2022
667,016
401,509
(43,735)
1,024,790
$
$
$
$
2021
608,243
94,186
(35,413)
667,016
The Company performed its annual impairment test of goodwill as at March 31, 2022. The recoverable amount of the
group of CGUs is determined based on fair value less costs of disposal using a capitalized EBITDA approach. The
approach requires management to estimate maintainable future EBITDA and capitalize this amount by rates of return
which incorporate the specific risks and opportunities facing the business. EBITDA includes income before income taxes,
net finance costs, depreciation and amortization.
In determining a maintainable future EBITDA, the historical operating results for the five years ended March 31, 2022
were compared to the budgeted results for the year ending March 31, 2023, as presented to and approved by the Board.
Non-recurring and unusual items have been adjusted in order to normalize past EBITDA. Management selected
capitalization rates in the range of 5.88% to 7.04% for the calculation of the reasonable range of capitalized EBITDA.
These capitalization rates were based on EBITDA multiples which incorporate specific risks and opportunities facing the
Company. The inputs used in the calculation are level three of the fair value hierarchy. As a result of the analysis,
management did not identify impairment for this group of CGUs.
Management believes that any reasonable possible change in the key assumptions on which the recoverable amount is
based would not cause the aggregate carrying amount to exceed the aggregate recoverable amount of the group of CGUs.
87
ATS AUTOMATION /// ANNUAL REPORT 2022 12. Intangible Assets
Development
projects
Note
Computer
software,
licenses
and other
Technology
Customer
relationships
Brands(i)
Total
Cost:
Balance, at March 31, 2020
Additions
Acquisition of subsidiaries
Disposals
Exchange and other
adjustments
Balance, at March 31, 2021
Additions
Acquisition of subsidiaries
Disposals
Exchange and other
adjustments
Balance, at March 31, 2022
5
5
$
$
$
28,252 $
6,165
160
–
52,718 $
3,866
6,681
(5,177)
90,301 $ 203,130 $
–
59,314
–
–
11,764
–
54,645 $ 429,046
10,031
102,059
(5,177)
–
24,140
–
(1,104)
33,473 $
12,851
–
(431)
2,720
48,613 $
(4,283)
(12,207)
(7,605)
50,483 $ 145,332 $ 202,687 $
353
112,215
–
–
144,369
–
3,753
17,301
(452)
(2,911)
(28,110)
75,874 $ 507,849
16,957
360,766
(883)
–
86,881
–
(28,630)
(11,414)
(2,841)
68,244 $ 247,134 $ 335,642 $ 156,426 $ 856,059
(10,766)
(6,329)
Development
projects
Computer
software,
licenses
and other
Technology
Customer
relationships
Brands(i)
Total
$ (14,862) $ (37,215) $ (25,237) $ (127,197) $
(2,539)
–
(3,961)
5,123
(12,184)
–
(20,142)
–
(4,366) $ (208,877)
(39,987)
(1,161)
5,123
–
513
6,927
1,941
8,464
$ (16,888) $ (29,126) $ (35,480) $ (138,875) $
(3,489)
269
(19,658)
439
(20,797)
–
(27,473)
–
271
18,116
(5,256) $ (225,625)
(72,302)
708
(885)
–
(3,322)
(23,430) $
1,215
(47,130) $
2,770
8,320
(53,507) $ (158,028) $
357
9,340
(5,784) $ (287,879)
25,183 $
16,585 $
21,114 $ 193,627 $ 177,614 $ 150,642 $ 568,180
70,618 $ 282,224
21,357 $ 109,852 $
63,812 $
$
$
$
Amortization:
Balance, at March 31, 2020
Amortization
Disposals
Exchange and other
adjustments
Balance, at March 31, 2021
Amortization
Disposals
Exchange and other
adjustments
Balance, at March 31, 2022
Net book value:
At March 31, 2022
At March 31, 2021
(i) The Company has assessed a portion of its brand intangible assets to have a useful life of two to five years. The carrying amount of the intangible
assets estimated to have an indefinite life as at March 31, 2022 was $146,358 (March 31, 2021 – $68,526).
Research and development costs that are not eligible for capitalization have been expensed and are recognized in
cost of revenues.
The Company performed its annual impairment test of indefinite-lived intangible assets as at March 31, 2022. The
recoverable amount of the related CGUs was estimated based on a value in use calculation using the present value of the
future cash flows expected to be derived by the related subsidiaries. This approach requires management to estimate
cash flows that include EBIT less income taxes, depreciation and amortization and capital expenditures.
In determining future cash flows, the budgeted results for the year ending March 31, 2023, as presented to and approved
by the Board, were extrapolated for a five-year period, followed by a terminal calculation based on the fifth year forecasted
amount. The estimated cash flows are based on historical data and past experience of operating within the marketplace.
The revenue growth rate used for the intangible asset impairment testing of indefinite-lived brands was 3%. The terminal
growth rates used were between 2% and 3%. The rates used to project cash flows are based on management’s
expectations for the growth of the cash generating unit and do not exceed long-term average growth rates for the markets
in which the cash generating units operate. Management used a pre-tax discount rate of 15% to determine the present
value of future cash flows. As a result of the analysis, management did not identify an impairment of the indefinite-lived
intangible assets and any reasonable change in assumptions would not result in impairment.
8 8
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 13. Financial Instruments and Risk Management
(a) Summary of financial instruments:
(i) Categories of financial instruments:
The carrying values of the Company’s financial instruments are classified into the following categories:
As at
$
$
Financial assets:
Cash and cash equivalents(i)
Trade accounts receivable
Financial liabilities:
Bank indebtedness
Trade accounts payable and
accrued liabilities
Long-term debt
Derivative instruments:
Held for trading derivatives that are
not designated in hedge accounting
relationships – gain(ii)
Derivative instruments in designated
accounting relationships – gain(ii)
Cross-currency interest rate swap – gain(iii)
As at
Financial assets:
Cash and cash equivalents(i)
Trade accounts receivable
Financial liabilities:
Bank indebtedness
Trade accounts payable and
accrued liabilities
Long-term debt
Put option
Derivative instruments:
Held for trading derivatives that are
not designated in hedge accounting
Fair value
through
profit or loss
Amortized
cost
Fair value
through other
comprehensive
income
–
–
–
–
–
$
135,282
325,791
$
(1,766)
(450,967)
(1,016,711)
1,059
–
–
–
–
–
–
–
–
–
–
–
1,836
14,069
Fair value
through
profit or loss
Fair value
through other
comprehensive
income
Amortized
cost
–
–
–
–
–
(24,827)
$
187,467
265,467
$
(1,106)
(348,450)
(430,713)
–
March 31, 2022
Total
carrying
value
$
135,282
325,791
(1,766)
(450,967)
(1,016,711)
1,059
1,836
14,069
March 31, 2021
Total
carrying
value
$
187,467
265,467
(1,106)
(348,450)
(430,713)
(24,827)
1,893
1,844
3,657
–
–
–
–
–
–
–
1,844
3,657
relationships – gain(ii)
1,893
Derivative instruments in designated
hedge accounting relationships –
gain(ii)
Cross-currency interest rate swap – gain(iii)
–
–
–
–
–
(i) Cash and cash equivalents is in the form of deposits on demand with major financial institutions. Cash equivalents were nil during the years ended
March 31, 2022 and March 31, 2021.
(ii) Derivative financial instruments in a gain position are included in deposits, prepaids and other assets, and derivative financial instruments in a loss
position are included in accounts payable and accrued liabilities on the consolidated statements of financial position.
(iii) The cross-currency interest rate swap instrument in a gain position is included in other assets on the consolidated statements of financial position.
The cross-currency interest rate swap instrument in a loss position is included in other long-term liabilities on the consolidated statements of
financial position.
During the years ended March 31, 2022 and March 31, 2021, there were no changes in the classification of financial
assets as a result of a change in the purpose or use of those assets.
89
ATS AUTOMATION /// ANNUAL REPORT 2022
(ii) Fair value measurements:
The following table summarizes the Company’s financial instruments that are carried or disclosed at fair value and
indicates the fair value hierarchy that reflects the significance of the inputs used in making the measurements:
As at
Measured at fair value:
Held for trading derivatives that are
not designated in hedge accounting
Carrying
value
Level 1
Level 2
Level 3
March 31, 2022
Fair value
total
relationships
$
1,059 $
– $
1,059 $
– $
1,059
Derivative instruments in designated
hedge accounting relationships
Cross-currency interest rate swap
Disclosed at fair value:
Long-term debt
As at
Measured at fair value:
Held for trading derivatives that are
not designated in hedge accounting
1,836
14,069
(1,016,711)
Carrying
value
–
–
–
1,836
14,069
(990,302)
–
–
–
1,836
14,069
(990,302)
March 31, 2021
Level 1
Level 2
Level 3
Fair value
total
relationships
$
1,893 $
– $
1,893 $
– $
1,893
Derivative instruments in designated
hedge accounting relationships
Cross-currency interest rate swap
Disclosed at fair value:
Long-term debt
Put option
1,844
3,657
(430,713)
(24,827)
–
–
–
–
1,844
3,657
–
–
1,844
3,657
(427,063)
–
–
(24,827)
(427,063)
(24,827)
The estimated fair values of cash and cash equivalents, accounts receivable, bank indebtedness, accounts payable and
accrued liabilities approximate their respective carrying values due to the short period to maturity. The estimated fair
value of long-term debt borrowings under the Credit Facility and other facilities approximates the carrying value due to
interest rates approximating current market values. The estimated fair value of the long-term debt Senior Notes reflects
the current trading price.
Derivative financial instruments are carried at fair value. The fair value of the Company’s derivative instruments is estimated
using a discounted cash flow technique incorporating inputs that are observable in the market or can be derived from
observable market data. The derivative contract counterparties are highly rated multinational financial institutions.
During the years ended March 31, 2022 and March 31, 2021, there were no transfers between Level 1 and Level 2 fair
value measurements.
(b) Risks arising from financial instruments and risk management:
The Company manages its market risk through the use of various financial derivative instruments. The Company uses
these instruments to mitigate exposure to fluctuations in foreign exchange rates. The Company’s strategy, policies and
controls are designed to ensure that the risks it assumes comply with the Company’s internal objectives and its risk
tolerance. The Company does not enter into derivative financial agreements for speculative purposes. As such, any
change in cash flows associated with derivative instruments is designed to be offset by changes in cash flows of the
relevant risk being hedged.
9 0
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
When appropriate, the Company applies hedge accounting. Hedging does not guard against all risks and is not always
effective. The Company may recognize financial losses as a result of volatility in the market values of these contracts. The
fair values of these instruments represent the price that would be received to sell the asset or paid to transfer the liability
in an orderly transaction between market participants at the measurement date. The fair value of these derivatives is
determined using valuation techniques such as discounted cash flow analysis. The valuation technique incorporates all
factors that would be considered in setting a price, including the Company’s own credit risk as well as the credit risk of
the counterparty.
Foreign currency risk
The Company transacts business in multiple currencies, the most significant of which are the Canadian dollar, the U.S.
dollar and the Euro. As a result, the Company has foreign currency exposure with respect to items denominated in foreign
currencies that may have an impact on operating results and cash flows. The types of foreign exchange risk can be
categorized as follows:
Translation exposure
Each foreign operation’s assets and liabilities are translated from the subsidiary’s functional currency into Canadian dollars
using the exchange rates in effect at the consolidated statement of financial position date. Unrealized translation gains
and losses are deferred and included in accumulated other comprehensive income. The cumulative currency translation
adjustments are recognized in income when there has been a reduction in the net investment in the foreign operations.
Foreign currency risks arising from the translation of assets and liabilities of foreign operations into the Company’s
functional currency are hedged under certain circumstances. The Company has assessed the net foreign currency
exposure of operations relative to their own functional currency. A fluctuation of +/- 5% in the Euro and U.S. dollar,
provided as an indicative range in a volatile currency environment, would, everything else being equal, have an effect
on accumulated other comprehensive income for the year ended March 31, 2022 of approximately +/- $78,351 and
$47,561, respectively (2021 +/- $62,454 and $15,046), and on income before income taxes for the year ended
March 31, 2022 of approximately +/- $349 and $1,555, respectively (2021 +/- $93 and $1,701).
Foreign-currency-based earnings are translated into Canadian dollars each period at prevailing rates. As a result,
fluctuations in the value of the Canadian dollar relative to these other currencies will impact reported net income.
Transaction exposure
The Company generates significant revenues in foreign currencies, which exceed the natural hedge provided by purchases
of goods and services in those currencies. The Company’s risk management objective is to reduce cash flow risk related
to foreign currency-denominated cash flows. In order to manage foreign currency exposure in subsidiaries that have
transaction exposure in currencies other than the subsidiary’s functional currency, the Company enters into forward
foreign exchange contracts. The timing and amount of these forward foreign exchange contracts are estimated based on
existing customer contracts on hand or anticipated, current conditions in the Company’s markets and the Company’s past
experience. As such, there is not a material transaction exposure.
The Company’s U.S. dollar-denominated Senior Notes are translated into Canadian dollars at the foreign exchange rate in
effect at the consolidated statement of financial position dates. As a result, the Company is exposed to foreign currency
translation gains and losses. The Company uses cross-currency interest rate swaps as derivative financial instruments to
hedge a portion of its foreign exchange risk related to the Senior Notes. The balance of the Senior Notes is designated as
a hedge of the U.S. dollar-denominated net investment in foreign operations.
91
ATS AUTOMATION /// ANNUAL REPORT 2022 Interest rate risk
Interest rate risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of
changes in market interest rates.
In relation to its debt financing, the Company is exposed to changes in interest rates, which may impact the Company’s
borrowing costs. Floating rate debt exposes the Company to fluctuations in short-term interest rates. The Company
manages interest rate risk on a portfolio basis and seeks financing terms in individual arrangements that are most
advantageous taking into account all relevant factors, including credit margin, term and basis. The risk management
objective is to minimize the potential for changes in interest rates to cause adverse changes in cash flows to the
Company. As at March 31, 2022, $1,753 or 0.2% (March 31, 2021 – $1,106 or 0.3%) of the Company’s total debt is
subject to movements in floating interest rates. A +/- 1% change in interest rates in effect for the fiscal year would, all
things being equal, have an impact of +/- $18 on income before income taxes for the year ended March 31, 2022
(March 31, 2021 +/- $11).
Credit risk
Credit risk is the risk of financial loss to the Company if a customer or counterparty to a financial instrument fails to meet
its contractual obligations. Financial instruments that potentially subject the Company to credit risk consist mainly of cash
and cash equivalents, accounts receivable, contract assets and derivative financial instruments. The carrying values of
these assets represent management’s assessment of the associated maximum exposure to such credit risk. Cash and
cash equivalents are held by major financial institutions. Substantially all of the Company’s trade accounts receivable and
contract assets are due from customers in a variety of industries and, as such, are subject to normal credit risks from
their respective industries. 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. Credit risk concentration with
respect to trade receivables is mitigated by the Company’s client base being primarily large, multinational customers and
a portion of these balances being insured by a third party.
Trade receivables – aged by due date as at
Current
1 – 30 days
31 – 60 days
61 – 90 days
Over 90 days
Total
March 31, 2022 March 31, 2021
$
$
254,809
29,734
17,992
8,247
20,225
331,007
$
$
211,924
30,330
8,475
9,337
11,428
271,494
The movement in the Company’s allowance for doubtful accounts for the years ended March 31 was as follows:
Balance, at April 1
Provision for doubtful accounts
Amounts written off
Recoveries
Foreign exchange
Balance, at March 31
2022
6,027
2,128
(434)
(1,269)
(1,236)
5,216
$
$
2021
3,031
5,660
(2,054)
(270)
(340)
6,027
$
$
The Company minimizes credit risk associated with derivative financial instruments by only entering into derivative
transactions with highly rated multinational financial institutions, in order to reduce the risk of counterparty default.
The Company reviews counterparty credit ratings on a regular basis and sets credit limits when deemed necessary.
9 2
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Liquidity risk
Liquidity risk is the risk that the Company may encounter difficulties in meeting obligations associated with financial
liabilities. The Company’s process for managing liquidity risk includes ensuring, to the extent possible, that it will have
sufficient liquidity to meet its liabilities when they become due. The Company requires authorizations for expenditures on
projects and prepares annual capital expenditure budgets to assist with the management of capital. The Company’s
accounts payable primarily have contractual maturities of less than 90 days, and the contractual cash flows equal their
carrying values.
Trade payables – aged by due date as at
0 – 30 days
31 – 60 days
61 – 90 days
Over 90 days
Total
March 31, 2022 March 31, 2021
$
$
138,274
15,768
9,648
8,952
172,642
$
$
99,480
9,267
4,414
4,938
118,099
As at March 31, 2022, the Company was holding cash and cash equivalents of $135,282 (March 31, 2021 – $187,467)
and had unutilized lines of credit of $228,947 (March 31, 2021 – $775,809). The Company expects that continued cash
flows from operations in fiscal 2023, together with cash and cash equivalents on hand and available credit facilities, will
be more than sufficient to fund its requirements for investments in working capital, property, plant and equipment and
strategic investments including some potential acquisitions, and that the Company’s credit ratings provide reasonable
access to capital markets to facilitate future debt issuance.
The Company’s long-term debt obligations and scheduled interest payments are presented in note 16.
(c) Hedge accounting and risk management contracts:
Cash flow hedges – foreign currency risk of forecasted purchases and sales
The Company manages foreign exchange risk on its highly probable forecasted revenue and purchase transactions
denominated in various foreign currencies. The Company has identified foreign exchange fluctuation risk as the hedged
risk. To mitigate the risk, forward currency contracts are designated as the hedging instrument and are entered into to
hedge a portion of the purchases and sales. The forward currency contracts limit the risk of variability in cash flows
arising from foreign currency fluctuations. The Company has established a hedge ratio of 1:1 for all of its hedging
relationships. The Company has identified counterparty credit risk as the only potential source of hedge ineffectiveness.
Cash flow hedges – foreign currency risk on foreign-currency-denominated Senior Notes
The Company uses cross-currency interest rate swaps as derivative financial instruments to hedge a portion of its foreign
exchange risk related to its U.S. dollar-denominated Senior Notes. The Company holds a cross-currency interest rate swap
instrument to swap U.S. $175,000 into Canadian dollars. Subsequent to March 31, 2022, the Company settled the
cross-currency interest rate swap instrument to swap U.S. $175,000 into Canadian dollars that was outstanding on
March 31, 2022. The Company received interest of 4.125% U.S. per annum and paid interest of 4.257% Canadian.
Subsequent to March 31, 2022, the Company entered into a cross-currency interest rate swap instrument on April 20,
2022, to swap U.S. $175,000 into Canadian dollars to hedge a portion of its foreign exchange risk related to its
U.S. dollar-denominated Senior Notes. The Company will receive interest of 4.125% U.S. per annum and pay interest of
4.169% Canadian. The terms of the hedging relationship will end on December 15, 2025. The Company has established
a hedge ratio of 1:1 for all of its hedging relationships. The Company has identified counterparty credit risk as the only
potential source of hedge ineffectiveness.
93
ATS AUTOMATION /// ANNUAL REPORT 2022 Hedge of Euro-denominated net investment in foreign operations
The Company manages foreign exchange risk on its Euro-denominated net investments. The Company uses a cross-
currency interest rate swap as a derivative financial instrument to hedge a portion of the foreign exchange risk related
to its Euro-denominated net investment. The Company holds a cross-currency interest rate swap instrument to swap
143,855 Euros into Canadian dollars. Subsequent to March 31, 2022, on April 20, 2022, the Company settled the
cross-currency interest rate swap instrument to swap 143,855 Euros into Canadian dollars that was outstanding on
March 31, 2022. The Company received interest of 4.257% Canadian per annum and paid interest of 3.145% Euros.
Subsequent to March 31, 2022, the Company entered into a cross-currency interest rate swap instrument on April 20,
2022, to swap 161,142 Euros into Canadian dollars. The Company will receive interest of 4.169% Canadian per annum
and pay interest of 2.351% Euros. The terms of the hedging relationship will end on December 15, 2025. The Company
has established a hedge ratio of 1:1 for all of its hedging relationships. The Company has identified counterparty credit
risk as the only potential source of hedge ineffectiveness.
During the years ended March 31, 2022 and March 31, 2021, expense of $1,100 and $nil, respectively, was recognized
in selling, general and administrative expenses for the ineffective portion of cash flow hedges.
The following table summarizes the Company’s outstanding cash flow hedge positions to buy and sell foreign currencies
under forward foreign exchange contracts and cross-currency interest rate swaps:
As at
March 31, 2022
Carrying amount
Hedging
instrument
Hedged item
Cash flow hedge reserves
Currency sold
Currency bought
Derivative hedging instruments(i)
U.S. dollars
Canadian dollars
Euros
U.S. dollars
Euros
Euros
Canadian dollars
U.S. dollars
Canadian dollars
Euros
U.S. dollars
Thai baht
Nominal
amount
(in CAD)
141,671
90
9,657
16,176
10,033
3,873
Assets
Liabilities
2,171
–
–
–
–
–
–
1
61
202
20
51
Cross-currency interest rate swap instruments(ii)
Changes in fair
value used for
calculating
hedge
ineffectiveness
Changes in fair
value used for
calculating
hedge
ineffectiveness
For
continuing
hedges
For
discontinued
hedges
2,171
1
61
202
20
51
2,171
1
61
202
20
51
2,171
1
61
202
20
51
–
–
–
–
–
–
–
–
U.S. dollars
Canadian dollars
Canadian dollars
Euros
218,803
198,966
–
18,004
3,935
–
(2,457)
12,869
(2,457)
12,869
3,935
18,004
As at
March 31, 2021
Carrying amount
Hedging
instrument
Hedged item
Cash flow hedge reserves
Currency sold
Currency bought
Derivative hedging instruments(i)
U.S. dollars
Euros
Euros
U.S. dollars
Canadian dollars
Canadian dollars
U.S. dollars
Euros
Nominal
amount
(in CAD)
93,742
13,601
7,573
1,150
Assets
Liabilities
1,745
154
–
5
–
–
60
–
Cross-currency interest rate swap instruments(ii)
Changes in fair
value used for
calculating
hedge
ineffectiveness
Changes in fair
value used for
calculating
hedge
ineffectiveness
For
continuing
hedges
For
discontinued
hedges
1,745
154
60
5
1,745
154
60
5
1,745
154
60
5
–
–
–
–
U.S. dollars
Canadian dollars
Canadian dollars
Euros
219,905
211,956
–
5,135
1,478
–
(21,698)
5,135
(21,698)
5,135
1,478
5,135
8,381
–
(i) Derivative hedging instruments in a gain position are included in deposits, prepaids and other assets, and derivative hedging instruments in a loss
position are included in accounts payable and accrued liabilities on the consolidated statements of financial position.
(ii) The cross-currency interest rate swap instrument in a gain position is included in other assets on the consolidated statements of financial position.
The cross-currency interest rate swap instrument in a loss position is included in other long-term liabilities on the consolidated statements of
financial position.
9 4
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS As at March 31, 2022, the Company is holding the following forward foreign exchange contracts to hedge the exposure on
its revenues and purchases:
As at
March 31, 2022
Less than 3 months
3 to 6 months
6 to 9 months
9 to 12 months
1 to 2 years
Currency sold
Currency bought
Nominal
amount
Average
hedged
rate
Nominal
amount
Average
hedged
rate
Nominal
amount
Average
hedged
rate
Nominal
amount
Average
hedged
rate
Nominal
amount
Average
hedged
rate
Revenue hedges
Euros
U.S. dollars
Euros
U.S. dollars
Euros
Canadian dollars
Purchase hedges
U.S. dollars
Euros
Euros
As at
Currency sold
Revenue hedges
U.S. dollars
U.S. dollars
Euros
Purchase hedges
U.S. dollars
Euros
Euros
U.S. dollars
Canadian dollars
Canadian dollars
Euros
Thai baht
U.S. dollars
1,841
67,035
3,769
9,192
2,870
90
1.131
1.267
1.415
0.897
36.322
0.794
–
29,770
2,068
2,443
1,003
–
–
1.268
1.402
0.889
36.457
–
–
12,848
388
720
–
–
Canadian dollars
U.S. dollars
Canadian dollars
4,513
1,813
3,129
1.283
1.102
1.457
–
1,633
–
–
1.108
–
–
1,451
–
–
1.276
1.409
0.843
–
–
–
1.111
–
–
7,502
304
1,875
–
–
–
1,452
–
–
1.282
1.416
0.868
–
–
–
1.111
–
1,841
20,005
–
1,947
–
–
–
–
–
1.147
1.285
–
0.953
–
–
–
–
–
March 31, 2021
Less than 3 months
3 to 6 months
6 to 9 months
9 to 12 months
Currency bought
Nominal
amount
Average
hedged
rate
Nominal
amount
Average
hedged
rate
Nominal
amount
Average
hedged
rate
Nominal
amount
Average
hedged
rate
Canadian dollars
Euros
Canadian dollars
47,210
861
6,630
1.296
0.861
1.502
30,887
289
1,473
1.265
0.837
1.540
12,617
–
2,211
1.261
–
1.543
–
–
–
–
–
–
Canadian dollars
U.S. dollars
Canadian dollars
3,028
2,360
3,287
1.272
1.188
1.546
–
2,296
–
–
1.185
–
–
1,458
–
–
1.184
–
–
1,459
–
–
1.184
–
The following summarizes the Company’s amounts included in other comprehensive income that relate to hedge accounting:
As at
March 31, 2022
Change in the value
of the hedging
instrument
recognized in OCI
gain (loss)
Hedge
ineffectiveness
recognized in
profit or loss
Amount reclassified
from the cash flow
profit or loss gain
(loss)
Line item affected
in profit or loss
because of the
reclassification
18
(9)
(2,457)
–
–
–
(57)
(109)
–
Revenues
Cost of revenues
Net finance costs
March 31, 2021
Change in the value
of the hedging
instrument
recognized in OCI
gain (loss)
Hedge
ineffectiveness
recognized in
profit or loss
Amount reclassified
from the cash flow
profit or loss gain
(loss)
Line item affected
in profit or loss
because of the
reclassification
(7,550)
720
(21,698)
–
–
–
644
754
–
Revenues
Cost of revenues
Net finance costs
Cash flow hedges
Foreign exchange risk:
Revenue hedges
Purchase hedges
Cross-currency interest rate swap
As at
Cash flow hedges
Foreign exchange risk:
Revenue hedges
Purchase hedges
Cross-currency interest rate swap
95
ATS AUTOMATION /// ANNUAL REPORT 2022 Instruments not subject to hedge accounting
As part of the Company’s risk management strategy, forward contract derivative financial instruments are used to manage
foreign currency exposure related to the translation of foreign currency net assets to the subsidiary’s functional currency.
As these instruments have not been designated as hedges, the change in fair value is recorded in selling, general and
administrative expenses in the consolidated statements of income.
For the year ended March 31, 2022, the Company recorded risk management gains of $9,090 (gains of $6,525 for the year
ended March 31, 2021) on foreign currency risk management forward contracts in the consolidated statements of income.
Included in these amounts were unrealized gains of $578 (losses of $268 during the year ended March 31, 2021),
representing the change in fair value. In addition, during the year ended March 31, 2022, the Company realized gains in
foreign exchange of $8,512 (gains of $6,793 during the year ended March 31, 2021), which were settled.
14. Provisions
Balance, at March 31, 2020
Provisions made
Acquisition of subsidiaries
Provisions reversed
Provisions used
Exchange adjustments
Balance, at March 31, 2021
Provisions made
Acquisition of subsidiaries
Provisions reversed
Provisions used
Exchange adjustments
Balance, at March 31, 2022
Warranty provisions
Warranty
Restructuring
7,962
6,268
2,816
(495)
(2,329)
(501)
13,721
3,038
1,220
(1,808)
(2,857)
(521)
12,793
$
$
$
19,796
14,355
2,802
–
(21,928)
(555)
14,470
5,949
–
–
(9,431)
(378)
10,610
$
$
$
$
$
$
Other
659
7,436
–
–
(7,184)
(68)
843
7,411
–
–
(6,829)
(3)
1,422
$
$
$
Total
28,417
28,059
5,618
(495)
(31,441)
(1,124)
29,034
16,398
1,220
(1,808)
(19,117)
(902)
24,825
Warranty provisions are related to sales of products and are based on experience reflecting statistical trends of
warranty costs.
Restructuring
Restructuring charges are recognized in the period incurred and when the criteria for provisions are fulfilled. Termination
benefits are recognized as a liability and an expense when the Company is demonstrably committed through a formal
restructuring plan.
In fiscal 2022, the Company recorded restructuring costs primarily related to the consolidation of an SP facility and the
closure of two underperforming CFT facilities intended to bring focus to areas with a stronger value proposition. During the
year ended March 31, 2022, the Company recognized restructuring costs of $5,949.
In fiscal 2021, the Company substantially completed a reorganization plan to help mitigate the expected impact of a
slowdown in transportation markets brought on by the COVID-19 pandemic. The reorganization included the sale of
certain assets and the transfer of employees from a German-based subsidiary to a third party that was completed in
October 2020. During the year ended March 31, 2021, the Company recognized restructuring costs of $14,355 in
relation to the reorganization.
On November 6, 2019, the Company initiated a reorganization plan, which resulted in the consolidation of certain operations
and the closure of several underperforming facilities and small branch offices. During the year ended March 31, 2021, the
Company recorded a gain of $5,339 on the sale of a facility made redundant due to the Company’s previously completed
reorganization which was included in selling, general and administrative expenses in the consolidated financial statements.
9 6
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Other provisions
Other provisions are related to medical insurance expenses that have been incurred during the period but are not yet paid,
and other miscellaneous provisions.
15. Employee Benefits
The Company operates pension plans for certain of its employees through defined contribution plans, defined benefit
plans and other long-term employee benefit plans. The costs associated with defined contribution plans are expensed as
incurred. The most recent actuarial valuations of the defined benefit plans and other long-term employee benefit plans
were completed as at March 31, 2022. The next valuations are scheduled to be as at March 31, 2023.
The changes in the fair value of assets, the employee benefit obligation and the funded status were as follows:
As at
Accrued benefit obligations:
Opening balance
Acquisition of subsidiary
Interest cost
Service cost
Assumption changes
Transfers and benefits paid
Foreign exchange
Accrued benefit obligations, ending balance
Plan assets:
Opening balance
Interest income included in net interest expense
Company contributions
Transfers
Foreign exchange
Plan assets, ending balance
Employee benefits liability
March 31, 2022 March 31, 2021
$
$
$
$
$
37,708
424
416
847
(2,594)
(2,463)
(1,617)
32,721
3,598
(137)
215
–
(87)
3,589
29,132
$
$
$
$
$
30,419
5,967
565
432
3,653
(2,362)
(966)
37,708
4,172
–
233
(721)
(86)
3,598
34,110
Amounts recognized in the consolidated statements of comprehensive income (before tax) were as follows:
As at
Total actuarial gains (losses) recognized in OCI
March 31, 2022 March 31, 2021
$
2,594
$
(3,653)
The significant weighted average annual actuarial assumptions used in measuring the accrued benefit obligation were as
follows:
As at
Discount rate
Rate of compensation increase
March 31, 2022 March 31, 2021
2.3%
0.7%
1.4%
0.6%
97
ATS AUTOMATION /// ANNUAL REPORT 2022
Sensitivity analysis
Significant actuarial assumptions for the determination of the defined benefit obligation are the discount rate and life
expectancy. The sensitivity analyses have been performed based on reasonably possible changes in the respective
assumptions occurring at the end of the reporting period, while holding all other assumptions constant.
As at March 31, 2022, the following quantitative analysis shows changes to the significant actuarial assumptions and the
corresponding impact on the accrued benefit obligations:
Discount rate
Life expectancy
1% increase
1% decrease
Increase
by 1 year
Decrease
by 1 year
Accrued benefit obligations
$
(3,141)
$
3,851
$
934
$
(923)
The sensitivity analysis presented above may not be representative of the actual change in the defined benefit obligation
as it is unlikely that the changes in assumptions would occur in isolation from one another as some of the assumptions
may be correlated.
The weighted average allocations of plan assets were:
As at
Other
March 31, 2022 March 31, 2021
100.00%
100.00%
No plan assets were directly invested in the Company’s securities.
The net employee benefits expense included the following components:
Years ended
Defined benefit plans
Service cost
Interest cost
Defined contribution plans
Net employee benefits expense
March 31, 2022 March 31, 2021
$
$
847
416
1,263
5,320
6,583
$
$
432
565
997
3,185
4,182
The Company expects to contribute $215 to its defined benefit plans during the year ending March 31, 2023.
The cumulative actuarial losses, net of income taxes, recognized in retained earnings as at March 31, 2022 were $6,034
(March 31, 2021 – $7,914).
9 8
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
16. Bank Indebtedness and Long-Term Debt
On August 12, 2021, the Company amended its senior secured credit facility (the “Credit Facility”) and extended its
maturity to August 29, 2024. The Credit Facility provides a committed revolving credit facility of $750,000. The Credit
Facility is secured by the Company’s assets, including a pledge of shares of certain of the Company’s subsidiaries. Certain
of the Company’s subsidiaries also provide guarantees under the Credit Facility. At March 31, 2022, the Company had
utilized $587,693 under the Credit Facility, of which $587,641 was classified as long-term debt (March 31, 2021 – $nil)
and $52 by way of letters of credit (March 31, 2021 – $2,232).
The Credit Facility is available in Canadian dollars by way of prime rate advances and/or bankers’ acceptances, in
U.S. dollars by way of base rate advances and/or LIBOR advances, in Swiss francs, Euros and British pounds sterling by
way of LIBOR advances and by way of letters of credit for certain purposes in Canadian dollars, U.S. dollars and Euros.
The interest rates applicable to the Credit Facility are determined based on a net debt-to-EBITDA ratio as defined in the
Credit Facility. For prime rate advances and base rate advances, the interest rate is equal to the bank’s prime rate or
the bank’s U.S. dollar base rate in Canada, respectively, plus a margin ranging from 0.45% to 2.00%. For bankers’
acceptances and LIBOR advances, the interest rate is equal to the bankers’ acceptance fee or LIBOR, respectively, plus a
margin that varies from 1.45% to 3.00%. The Company pays a fee for usage of financial letters of credit that ranges from
0.97% to 2.00%, and a fee for usage of non-financial letters of credit that ranges from 0.97% to 2.00%. The Company
pays a standby fee on the unadvanced portions of the amounts available for advance or draw-down under the Credit
Facility at rates ranging from 0.29% to 0.60%.
The Credit Facility is subject to financial covenants including a net debt-to-EBITDA test and an interest coverage test.
Under the terms of the Credit Facility, the Company is restricted from encumbering any assets with certain permitted
exceptions. The Credit Facility also limits advances to subsidiaries and partially restricts the Company from repurchasing
its common shares and paying dividends. At March 31, 2022, all of the covenants were met.
The Company has additional credit facilities available of $69,121 (40,115 Euros, $10,000 U.S., 30,000 Thai Baht and
114 Czech Koruna). The total amount outstanding on these facilities as at March 31, 2022 was $1,919 of which $1,766
was classified as bank indebtedness (March 31, 2021 – $1,106) and $153 was classified as long-term debt (March 31,
2021 – $120). The interest rates applicable to the credit facilities range from 0.95% to 5.60% per annum. A portion of
the long-term debt is secured by certain assets of the Company.
The Company’s U.S. $350,000 aggregate principal amount of senior notes (“the Senior Notes”) were issued at par, bear
interest at a rate of 4.125% per annum and mature on December 15, 2028. After December 15, 2023, the Company may
redeem the Senior Notes, in whole at any time or in part from time to time, at specified redemption prices and subject to
certain conditions required by the Senior Notes. If the Company experiences a change of control, the Company may be
required to repurchase the Senior Notes, in whole or in part, at a purchase price equal to 101% of the aggregate principal
amount of the Senior Notes, plus accrued and unpaid interest, if any, to, but not including, the redemption date. The
Senior Notes contain customary covenants that restrict, subject to certain exceptions and thresholds, some of the
activities of the Company and its subsidiaries, including the Company’s ability to dispose of assets, incur additional debt,
pay dividends, create liens, make investments, and engage in specified transactions with affiliates. At March 31, 2022, all
of the covenants were met. Subject to certain exceptions, the Senior Notes are guaranteed by each of the subsidiaries of
the Company that is a borrower or has guaranteed obligations under the Credit Facility. Transaction fees of $8,100 were
deferred and will be amortized over the term of the Senior Notes. The Company uses a cross-currency interest rate swap
instrument to hedge a portion of its U.S.-dollar-denominated Senior Notes (see note 9).
(i) Bank indebtedness:
As at
Other facilities
March 31, 2022 March 31, 2021
$
1,766
$
1,106
99
ATS AUTOMATION /// ANNUAL REPORT 2022 (ii) Long-term debt:
As at
Credit Facility
Senior Notes
Other facilities
Issuance costs
Less: current portion
March 31, 2022 March 31, 2021
$
$
587,641
437,605
153
(8,688)
1,016,711
43
1,016,668
$
$
–
439,810
120
(9,217)
430,713
79
430,634
Scheduled principal repayments and interest payments on long-term debt as at March 31, 2022 are as follows:
Less than one year
One – two years
Two – three years
Three – four years
Four – five year
Thereafter
17. Share Capital
Principal
$
43
587,736
9
6
–
437,605
$ 1,025,399
$
$
Interest
18,051
18,051
18,051
18,051
18,051
36,102
126,357
Authorized share capital of the Company consists of an unlimited number of common shares, without par value, for
unlimited consideration.
On December 13, 2021, the Company announced that the Toronto Stock Exchange (“TSX”) had accepted a notice filed by
the Company of its intention to make a normal course issuer bid (“NCIB”). Under the NCIB, ATS may purchase for
cancellation up to a maximum of 7,383,567 common shares during the 12-month period ending December 14, 2022.
For the year ended March 31, 2022, the Company purchased nil common shares under the NCIB program. At March 31,
2022, a total of 7,383,567 common shares remained available for repurchase under the NCIB.
Subsequent to March 31, 2022, during the period April 1, 2022 to May 18, 2022, the Company repurchased 349,280
common shares for cancellation under the NCIB program for $11,426.
For the year ended March 31, 2021, the Company purchased 511,528 common shares (March 31, 2020 – 301,386) for
$8,662 (March 31, 2020 – $4,785) under the previous NCIB program. All purchases are made in accordance with the bid
at prevalent market prices plus brokerage fees, or such other prices that may be permitted by the TSX, with consideration
allocated to share capital up to the average carrying amount of the shares, and any excess allocated to retained earnings.
The changes in the common shares issued and outstanding during the years presented were as follows:
Number of
common shares
Share capital
92,130,955
457,676
(511,528)
92,077,103
190,621
92,267,724
$
$
$
521,884
7,485
(2,923)
526,446
3,795
530,241
Balance, at March 31, 2020
Exercise of stock options
Repurchase of common shares
Balance, at March 31, 2021
Exercise of stock options
Balance, at March 31, 2022
1 00
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 18. Taxation
(i) Reconciliation of income taxes:
Income tax expense differs from the amounts that would be obtained by applying the combined Canadian basic federal
and provincial income tax rate to income before income taxes. These differences result from the following items:
Years ended
Note March 31, 2022 March 31, 2021
Income before income taxes and non-controlling interest
Combined Canadian basic federal and provincial income tax rate
Income tax expense based on combined Canadian basic federal and
provincial income tax rate
Increase (decrease) in income taxes resulting from:
Adjustments in respect to current income tax of previous periods
Non-taxable income (loss) net of non-deductible expenses
Unrecognized assets (recognition of previously unrecognized assets)
Income taxed at different rates and statutory rate changes
Manufacturing and processing allowance and all other items
At the effective income tax rate of 21% (2021 – 19%)
Income tax expense reported in the consolidated statements of income:
Current tax expense
Deferred tax recovery
Deferred tax related to items charged or credited directly to equity or goodwill:
Gain on revaluation of cash flow hedges
Opening deferred tax of acquired companies
Other items recognized through equity
Income tax charged to equity or goodwill
5
$
$
$
$
$
$
$
154,411
26.50%
$
79,457
26.50%
40,919
$
21,056
868
(869)
441
(6,677)
(1,663)
33,019
68,631
(35,612)
33,019
631
(94,407)
2,199
(91,577)
$
$
$
$
$
(46)
7,460
(5,910)
(5,298)
(1,908)
15,354
44,408
(29,054)
15,354
3,712
(13,586)
2,495
(7,379)
(ii) Components of deferred income tax assets and liabilities:
Deferred income taxes are provided for the differences between accounting and tax bases of assets and liabilities.
Deferred income tax assets and liabilities comprise of the following:
As at
Accounting income not currently taxable
Intangible assets
Investment tax credits taxable in future years when utilized
Loss available for offset against future taxable income
Property, plant and equipment
Other
Net deferred income tax liability
Presented as:
Deferred income tax assets
Deferred income tax liabilities
Net deferred income tax liability
March 31, 2022 March 31, 2021
$
$
(16,848)
(126,818)
(11,264)
13,868
23,375
(505)
(118,192)
$
$
(32,440)
(68,249)
(13,999)
20,377
24,170
2,254
(67,887)
March 31, 2022 March 31, 2021
$
$
7,922
(126,114)
(118,192)
$
$
11,087
(78,974)
(67,887)
101
ATS AUTOMATION /// ANNUAL REPORT 2022
Unrecognized deferred income tax assets:
Deferred income tax assets have not been recognized in respect of the following item:
As at
March 31, 2022 March 31, 2021
Losses and other assets available for offset against future taxable income
$
44,989
$
37,441
Loss carryforwards:
As at March 31, 2022, the Company has the following net operating loss carryforwards that are scheduled to expire in the
following years:
As at
Year of expiry
2023–2029
2030–2042
No expiry
As at
Year of expiry
2022–2024
2025–2029
2030–2040
No expiry
March 31, 2022
Non-Canadian
Canadian
$
$
12,654
7,828
63,060
83,542
$
$
–
27,196
–
27,196
March 31, 2021
Non-Canadian
Canadian
$
$
4,181
13,775
8,078
52,608
78,642
$
$
–
–
44,793
–
44,793
At March 31, 2022 and March 31, 2021, the Company did not have U.S. federal and state capital loss carryforwards. The
Company has Canadian capital loss carryforwards of $76,439 (March 31, 2021 – $78,932) that do not expire.
Investment tax credits:
As at March 31, 2022, the Company has investment tax credits available to be applied against future taxes payable in
Canada of approximately $23,287 and in foreign jurisdictions of approximately $10,306. The investment tax credits are
scheduled to expire as follows:
Year of expiry
2031–2036
2037–2042
Gross ITC balance
$
$
3,620
29,973
33,593
The benefit of $26,334 (March 31, 2021 – $52,440) of these investment tax credits has been recognized in the
consolidated financial statements. Unrecognized investment tax credits are scheduled to expire between 2035 and 2042.
(iii) The Company has determined that as of the reporting date, undistributed profits of its subsidiaries will not be
distributed in the foreseeable future.
(iv) There are temporary differences of $24,968 associated with investments in subsidiaries for which no deferred
income tax liability has been recognized.
1 02
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 19. Stock-Based Compensation
Employee Share Purchase Plan: Under the terms of the Company’s Employee Share Purchase Plan, qualifying employees
of the Company may set aside funds through payroll deductions for an amount up to a maximum of 10% of their base
salary or $10,000 in any one calendar year. Subject to the member not making withdrawals from the plan, the Company
makes contributions to the plan equal to 20% of a member’s contribution to the plan during the year, up to a maximum of
1% of the member’s salary or $2,000. Shares for the plan may be issued from treasury or purchased in the market as
determined by the Company’s Board of Directors. During the years ended March 31, 2022 and March 31, 2021, no
shares were issued from treasury related to the plan.
Deferred Stock Unit Plan: The Company offers a Deferred Stock Unit Plan (“DSU Plan”) for members of the Board. Under
the DSU Plan, each non-employee director may elect to receive all or a portion of his or her annual compensation in the
form of notional common shares of the Company called deferred stock units (“DSUs”). The issue and redemption prices
of each DSU are based on a five-day volume weighted average trading price of the Company’s common shares for the five
trading days prior to issuance or redemption. Under the terms of the DSU Plan, directors are not entitled to convert DSUs
into cash until retirement from the Board. The value of each DSU, when converted to cash, will be equal to the market
value of a common share of the Company at the time the conversion takes place. During the year ended March 31, 2022,
the Company granted 33,189 units (March 31, 2021 – 51,386 units). During the year ended March 31, 2022, no units
(March 31, 2021 – 113,604 units) were redeemed upon directors retirement from the Board. As at March 31, 2022, the
value of the outstanding liability related to the DSUs was $16,450 (2021 – $8,732). The DSU liability is revalued at each
reporting date based on the change in the Company’s stock price. The DSU liability is included in accounts payable and
accrued liabilities on the consolidated statements of financial position. The change in the value of the DSU liability is
included in the consolidated statements of income in the period of the change.
Stock Option Plan: The Company uses a stock option plan to attract and retain key employees, officers and directors.
Under the Company’s 1995 Stock Option Plan (the “1995 Plan”), the shareholders have approved a maximum of
5,991,839 common shares for issuance, with the maximum reserved for issuance to any one person at 5% of the
common shares outstanding at the time of the grant. Time-vested stock options vest over four-year periods. Performance-
based stock options vest based on the Company’s stock trading at or above a threshold for a specified number of
minimum trading days in a fiscal quarter. For time-vested stock options, the exercise price is the price of the Company’s
common shares on the Toronto Stock Exchange at closing for the day prior to the date of the grant. For performance-
based stock options, the exercise price is either the price of the Company’s common shares on the TSX at closing for the
day prior to the date of the grant or the five-day volume weighted average price of the Company’s common shares on the
TSX prior to the date of the grant. Stock options granted under the 1995 Plan may be exercised during periods not
exceeding seven years from the date of grant, subject to earlier termination upon the option holder ceasing to be a
director, officer or employee of the Company. Stock options issued under the 1995 Plan are non-transferable. Any stock
option granted that is cancelled or terminated for any reason prior to exercise is returned to the pool and becomes
available for future stock option grants. In the event that the stock option would otherwise expire during a restricted
trading period, the expiry date of the stock option is extended to the 10th business day following the date of expiry of such
period. In addition, the 1995 Plan restricts the granting of stock options to insiders that may be under the 1995 Plan.
Under the Company’s 2006 Stock Option Plan (the “2006 Plan”), the shareholders have approved a maximum of
5,159,000 common shares for issuance. The terms of the 2006 Plan are identical to those of the 1995 Plan, except
that the maximum number of common shares to be issued pursuant to the issue of options under the 2006 Plan is
5,159,000 common shares.
103
ATS AUTOMATION /// ANNUAL REPORT 2022 As at March 31, 2022, there are a total of 2,081,258 common shares remaining for future stock option grants under both
plans (March 31, 2021 – 2,265,329).
Years ended March 31
2022
Weighted
average
exercise price
2021
Weighted
average
exercise price
Number of
stock options
Number of
stock options
Stock options outstanding, beginning of year
Granted
Exercised(i)
Forfeited
Stock options outstanding, end of year
Stock options exercisable, end of year, time-vested options
896,958 $
195,560
(190,621)
(11,489)
890,408 $
396,858 $
17.93
30.07
15.70
20.45
21.04
17.28
1,162,149 $
253,491
(457,676)
(61,006)
896,958 $
396,886 $
15.71
20.22
13.36
19.47
17.93
16.03
(i) For the year ended March 31, 2022, the weighted average share price at the date of exercise was $36.81 (March 31, 2021 – $19.87).
As at March 31, 2022
Stock options outstanding
Stock options exercisable
Range of exercise prices
$10.46–$19.47
$19.48–$20.26
$20.27–$25.48
$25.49–$30.07
$10.46–$30.07
Weighted
average
remaining
contractual
life
Weighted
average
exercise price
Number
exercisable
Weighted
average
exercise price
1.32 years $
5.39 years
3.67 years
6.17 years
4.23 years $
13.12
20.22
20.60
30.07
21.04
171,038 $
58,856
166,964
–
396,858 $
13.09
20.22
20.53
–
17.28
Number
outstanding
172,138
243,983
278,727
195,560
890,408
The expense associated with the Company’s performance-based stock options is recognized in income over the estimated
assumed vesting period at the time the stock options are granted. Upon the Company’s stock price trading at or above a
stock price performance threshold for a specified minimum number of trading days, the options vest. When the
performance-based stock options vest, the Company is required to recognize all previously unrecognized expenses
associated with the vested stock options in the period in which they vest.
The fair values of the Company’s stock options issued during the periods presented were estimated at the date of grant
using the Black-Scholes option pricing model with the following weighted average assumptions. Expected stock price
volatility was determined at the time of the grant by considering historical share price volatility. Expected stock option
grant life was determined at the time of the grant by considering the average of the grant vesting period and the grant
exercise period.
Years ended March 31
Weighted average risk-free interest rate
Dividend yield
Weighted average expected volatility
Weighted average expected life
Number of stock options granted:
Time-vested
Weighted average exercise price per option
Weighted average value per option:
Time-vested
2022
0.84%
0%
32%
4.75 years
2021
0.36%
0%
32%
4.75 years
195,560
30.07
8.69
$
$
253,491
20.22
5.55
$
$
1 04
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Restricted Share Unit Plan
During the year ended March 31, 2022, the Company granted 188,532 time-vesting restricted share units (“RSUs”)
(298,457 in the year ended March 31, 2021). The RSUs give the employee the right to receive a cash payment equal to
the market value of a common share of the Company. During the year ended March 31, 2022, the Company granted
113,037 performance-based RSUs (137,652 in the year ended March 31, 2021). The performance-based RSUs vest upon
successful achievement of certain operational and share price targets. The performance-based RSUs give the employee the
right to receive a cash payment based on the market value of a common share of the Company. The weighted average
remaining vesting period for the time-vesting RSUs and performance-based RSUs is 1.48 years. The RSU liability is
recognized quarterly based on the expired portion of the vesting period, the change in the Company’s stock price and for
performance-based RSUs, the estimated achievement of certain operational and share price targets. At March 31, 2022,
the value of the outstanding liability related to the RSU plan was $18,596 (March 31, 2021 – $8,892). The RSU liability is
included in accounts payable and accrued liabilities on the consolidated statements of financial position.
20. Commitments and Contingencies
The minimum purchase obligations are as follows as at March 31, 2022:
Less than one year
One – two years
Two – three years
Three – four years
Four – five years
$
$
399,636
7,580
706
608
88
408,618
The Company’s off-balance sheet arrangements consist of purchase obligations which consist primarily of commitments
for materials purchases, which have been entered into in the normal course of business.
In accordance with industry practice, the Company is liable to customers for obligations relating to contract completion
and timely delivery. In the normal conduct of its operations, the Company may provide letters of credit as security for
advances received from customers pending delivery and contract performance. In addition, the Company provides letters
of credit for post-retirement obligations and may provide letters of credit as security on equipment under lease and on
order. As at March 31, 2022, the total value of outstanding letters of credit was approximately $135,909 (March 31,
2021 – $154,030).
In the normal course of operations, the Company is party to a number of lawsuits, claims and contingencies. Although it is
possible that liabilities may be incurred in instances for which no accruals have been made, the Company does not believe
that the ultimate outcome of these matters will have a material impact on its consolidated statements of financial position.
105
ATS AUTOMATION /// ANNUAL REPORT 2022 21. Segmented Disclosure
The Company’s operations are reported as one operating segment, Automation Systems, which plans, allocates
resources, builds capabilities and implements best practices on a global basis.
Geographic segmentation of revenues is determined based on revenues by customer location. Non-current assets
represent property, plant and equipment, right-of-use assets and intangible assets that are attributable to individual
geographic segments, based on location of the respective operations.
As at
Canada
United States
Germany
Italy
Other Europe
Other
Total Company
As at
Canada
United States
Germany
Italy
Other Europe
Other
Total Company
March 31, 2022
Right-of-use
assets
Property, plant
and equipment
5,814
12,770
24,703
25,950
8,045
4,007
81,289
$
$
55,308
80,497
32,186
34,960
18,322
850
222,123
$
$
Intangible
assets
27,021
324,739
46,448
147,188
22,513
271
568,180
March 31, 2021
Right-of-use
assets
Property, plant
and equipment
7,594
778
25,653
27,258
6,800
4,487
72,570
$
$
55,793
31,541
34,240
38,918
18,880
924
180,296
$
$
Intangible
assets
26,504
9,442
61,230
162,661
22,282
105
282,224
$
$
$
$
Revenues from external customers for the years ended
March 31, 2022 March 31, 2021
Canada
United States
Germany
Italy
Other Europe
Other
Total Company
$
$
120,648
939,186
269,818
88,343
464,721
300,001
2,182,717
$
107,572
580,044
257,285
11,266
299,241
174,644
$ 1,430,052
For the years ended March 31, 2022 and March 31, 2021, the Company did not have revenues from any single customer
that amounted to 10% or more of total consolidated revenues.
1 06
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 22. Revenue from Contracts with Customers
(a) Disaggregation of revenue from contracts with customers:
Revenues by market for the years ended
Life sciences
Food & Beverage
Transportation
Consumer Products
Energy
Total Company
Timing of revenue recognition based on
transfer of control for the years ended
Goods and services transferred at a point in time
Goods and services transferred over time
Total Company
(b) Backlog:
March 31, 2022 March 31, 2021
$
$
1,113,053
395,034
293,764
268,973
111,893
2,182,717
$
805,375
35,024
272,346
203,196
114,111
$ 1,430,052
March 31, 2022 March 31, 2021
$
$
337,305
1,845,412
2,182,717
$
121,643
1,308,409
$ 1,430,052
The following table presents the aggregate amount of the revenues expected to be realized in the future from partially or
fully unsatisfied performance obligations as at March 31, 2022 and 2021. The amounts disclosed below represent the
value of firm orders and do not include constrained variable consideration or letters of intent. Such orders may be subject
to future modifications that could impact the amount and/or timing of revenue recognition.
Revenues expected to be recognized in:
Less than one year
Thereafter
Total
(c) Accounts receivable continuity:
As at
Trade accounts receivable
Less: allowance for expected credit loss
Trade accounts receivables, net
Other accounts receivable
Total
(d) Contract balances:
As at
Trade receivables
Contract assets
Contract liabilities
Unearned revenue(i)
Net contract balances
March 31, 2022 March 31, 2021
$
$
1,205,000
233,000
1,438,000
$ 1,025,000
135,000
$ 1,160,000
March 31, 2022 March 31, 2021
$
$
$
331,007
(5,216)
325,791
22,840
348,631
$
$
$
271,494
(6,027)
265,467
20,480
285,947
March 31, 2022 March 31, 2021
$
$
325,791
360,820
(248,329)
(43,682)
394,600
$
$
265,467
272,847
(218,290)
(34,289)
285,735
(i) The unearned revenue liability is included in accounts payable and accrued liabilities on the consolidated statement of financial position.
As at
Contracts in progress:
Costs incurred
Estimated earnings
Progress billings
Net contract assets & liabilities
March 31, 2022 March 31, 2021
$
$
2,817,181
914,244
3,731,425
(3,618,934)
112,491
$ 2,039,017
745,068
2,784,085
(2,729,528)
54,557
$
107
ATS AUTOMATION /// ANNUAL REPORT 2022 Contract assets relate to revenue earned in exchange of goods or services that have been transferred to a customer.
These assets are billed and transferred to accounts receivable when the right to receive the consideration becomes
unconditional. As such, the balances of this account vary and depend on the timing of billings on contracts at the end of
the year.
Contract liabilities represent the obligation to transfer goods and services for which the Company has received
consideration. The balance of this account is dependent on timing of progress on the contract as well as receipts from
customers, and as such will vary.
The outstanding contract asset balance increased by $8,161 during the year ended March 31, 2022 as a result of
business acquisitions, with the remaining increase due to the timing of billings on certain customer contracts.
The outstanding contract liability balance increased by $18,637 during the year ended March 31, 2022 as a result of
business acquisitions, with the remaining increase due to the timing of billings on certain customer contracts.
23. Operating Costs and Expenses
Depreciation, amortization and employee benefit expenses recorded in the consolidated statement of operations are
detailed as follows:
Included in cost of revenues:
Depreciation of property, plant and equipment
Amortization of right-of-use assets
Amortization of intangible assets
Wages, salaries and other employee benefits
Included in selling, general and administrative expenses:
Depreciation of property, plant and equipment
Amortization of right-of-use assets
Amortization of intangible assets
Wages, salaries and other employee benefits
Retirement benefits(i)
(i)
Includes defined benefit and defined contribution plan expenses.
24. Net Finance Costs
Years ended
Interest expense(i)
Interest on lease liabilities
Interest income
March 31, 2022 March 31, 2021
$
$
$
$
14,223
16,365
5,543
630,177
6,694
5,837
66,759
158,552
6,583
10,963
13,469
3,587
456,135
3,857
2,642
36,400
105,352
4,182
March 31, 2022 March 31, 2021
$
$
28,978
3,730
(508)
32,200
$
$
38,953
2,820
(1,621)
40,152
(i)
Included in interest expense for the year ended March 31, 2021 are finance costs of $9,118 associated with the redemption of the U.S. $250,000
6.5% senior notes that were due in 2023.
25. Earnings Per Share
Years ended
Weighted average number of common shares outstanding
Dilutive effect of stock option conversion
Diluted weighted average number of common shares outstanding
March 31, 2022 March 31, 2021
92,206,291
421,159
92,627,450
92,199,720
167,524
92,367,244
For the year ended March 31, 2022, stock options to purchase nil common shares are excluded from the weighted average
number of common shares in the calculation of diluted earnings per share as they are anti-dilutive (558,116 common
shares were excluded for the year ended March 31, 2021).
1 08
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 26. Capital Management
The Company’s capital management framework is designed to ensure the Company has adequate liquidity, financial
resources and borrowing capacity to allow financial flexibility and to provide an adequate return to shareholders. The
Company defines capital as the aggregate of equity (excluding accumulated other comprehensive income), bank
indebtedness, long-term debt, lease liabilities and cash and cash equivalents.
The Company monitors capital using the ratio of total debt to equity. Total debt includes bank indebtedness, long-term
debt and lease liabilities as shown on the consolidated statements of financial position. Equity includes all components
of equity, less accumulated other comprehensive income. The Company also monitors an externally imposed covenant of
debt to EBITDA of not greater than 3 to 1. EBITDA includes income before income taxes, net finance costs, depreciation
and amortization. For the years ended March 31, 2022 and March 31, 2021, the Company operated with a ratio below
the externally imposed covenant. The Company is prepared to increase the total debt-to-equity ratio and net debt-to-
EBITDA ratio if appropriate opportunities arise.
The capital management criteria can be illustrated as follows:
As at
Equity excluding accumulated other comprehensive income
Long-term debt
Lease liabilities
Bank indebtedness
Cash and cash equivalents
Capital under management
Debt-to-equity ratio
27. Related Party Disclosure
March 31, 2022 March 31, 2021
$
$
962,835
1,016,711
82,820
1,766
(135,282)
1,928,850
1.14:1
$
850,530
430,713
72,961
1,106
(187,467)
$ 1,167,843
0.59:1
The Company has an agreement with a shareholder, Mason Capital Management, LLC (“Mason Capital”), pursuant to
which Mason Capital agreed to provide ATS with ongoing strategic and capital markets advisory services for an annual fee
of U.S. $500. As part of the agreement, Michael Martino, a member of the Company’s Board of Directors who is
associated with Mason Capital has waived any fees to which he may have otherwise been entitled for serving as a
member of the Board or as a member of any committee of the Board.
The compensation of the Board and key management personnel is determined by the Board on recommendation from the
Human Resources Committee of the Board:
As at
Short-term employee benefits
Fees
Stock-based compensation(i)
Post-employment benefits
Total compensation
March 31, 2022 March 31, 2021
$
$
5,755
625
19,175
46
25,601
$
$
5,705
661
9,309
26
15,701
(i) Stock-based compensation includes approximately $12,000 (2021 – approximately $5,800) related to changes in the fair value of cash-settled plans
due to the increase in the Company’s share price during the year.
The amounts disclosed in the table are the amounts recognized as an expense during the reporting period related to key
management personnel.
109
ATS AUTOMATION /// ANNUAL REPORT 2022 Board of Directors
Dave W. Cummings
Mr. Cummings is an experienced executive with an extensive background in digital, technical, engineering, operations and commercial
leadership, building this career in numerous international roles. Currently, Mr. Cummings is the Executive Vice President and Chief
Digital Officer for Finning International, the world’s largest international Caterpillar Equipment dealership headquartered in Vancouver,
Canada. At Finning, as well as leading the global technology, operations excellence, marketing and revenue management teams,
Mr. Cummings has been the architect behind the creation of the new Finning Digital division. While with Finning, Mr. Cummings also
spent almost three years living in Chile supporting the business while the company implemented the corporate digital and technology
strategies across all of its South American businesses. Mr. Cummings has been an active participant in audit committee and safety,
health and environmental matters at Finning. Mr. Cummings is a member of the executive management team that oversees the
financial health of the business and has had financial accountability in many of his roles throughout his career. Both at Finning and
with prior companies, Mr. Cummings has significantly advanced the companies’ cyber security capabilities and benchmarked
performance in the protection of company data and assets. Prior to joining Finning, Mr. Cummings held C-suite and Technology
leadership positions at Maxum Petroleum in Connecticut, USA, North America’s largest fuels and lubricants distribution company, and
Univar in Seattle, Washington, an $11bn global industrial chemical distributor.
Mr. Cummings began his career in the oil and gas industry and spent 23 years with DuPont, then ConocoPhillips. Mr. Cumming started
his career in the UK and had an international career holding roles and assignments in numerous countries. While with ConocoPhillips,
Mr. Cummings has held leadership roles in operations, engineering, technology, commercial and business development. This multi-
national and multi-disciplined career positions Mr. Cummings to bring a very diverse perspective to the ATS Board. Mr. Cummings is a
serving member of the board of directors of BCTech, a western Canada government-partnered not-for-profit organization dedicated to
growing and scaling homegrown Canadian technology startups, and Sanctuary AI – a robotics and AI startup headquartered in
Vancouver, BC, where he is also a member of the Audit Committee. Mr. Cummings was educated in the United Kingdom and earned a
BS (Honours) in Business Administration and an MBA in Business Management.
Joanne S. Ferstman
Ms. Ferstman currently serves as a corporate director. She has over 20 years of progressive experience in the financial industry. Over
an 18-year period until her retirement in June 2012, she held several leadership positions with the Dundee group of companies, which
operated in wealth management, resources and real estate verticals. She was responsible for financial and regulatory reporting, risk
management, and involved in mergers and acquisitions and strategic development and held the position of Chief Financial Officer for
many years and latterly held the positions of Vice Chair of DundeeWealth Inc. and President and Chief Executive Officer of Dundee
Capital Markets Inc. Prior to joining the Dundee group of companies, Ms. Ferstman spent five years at a major international accounting
firm. She is a Chartered Professional Accountant and has a Bachelor of Commerce and Graduate Diploma in Public Accountancy from
McGill University. She currently serves as the Chair of DREAM Unlimited Corp. (a real estate company). She also serves as lead
director of Osisko Gold Royalties Ltd. (a mining royalty company), and as a director of Cogeco Communications Inc. (a communications
company). Ms. Ferstman was formerly a director of Aimia Inc., and Osisko Development Corporation, and a trustee of DREAM
Office REIT.
Ms. Ferstman brings a wealth of experience. She was CEO of Dundee Capital Markets Inc., a financial services company focused on
investment banking, sales trading and financial advisory. She is a financial expert, being a CPA, having been a CFO of complex public
companies for approximately 18 years, and an audit committee member/chair in various industries. Her capital markets experience
was gained throughout her executive career at a financial company which operated in the capital markets and performed a variety of
capital markets functions for clients. In addition, as a CFO of a public company, Ms. Ferstman dealt with many aspects of capital
markets, debt and equity financings, research analysis, and M&A transactions. Ms. Ferstman’s international exposure includes having
overseen operations in the U.S. and Europe. She has had the opportunity to deal with many aspects of executive compensation in her
career. Her experience on various boards of directors has provided additional exposure to capital markets, international business,
human resources, legal, and governance matters.
Andrew P. Hider
Mr. Hider is the Chief Executive Officer of ATS Automation Tooling Systems Inc. He is an experienced executive with a track record of
success founded on his ability to drive business growth and operational performance in complex business environments and across
multiple industries including transportation, advanced technology, instrumentation and industrial products. Most recently, Mr. Hider
served as President and CEO of the Taylor Made Group, LLC, a diversified global leader in the supply of innovative products and
systems for marine, transportation, agriculture, and construction markets, a position he held from May 2016 through to February 2017.
Prior to that, Mr. Hider served for 10 years at Danaher Corporation, a global science and technology company, initially joining Danaher
as General Manager and Director of Dover and most recently serving as President of Veeder Root. Mr. Hider began his career with
General Electric, serving in a number of areas over a six-year period including manufacturing, project management, procurement and
finance, culminating in his appointment as General Manager of GE Tri-Remanufacturing. Mr. Hider holds a Bachelor of Science in
Interdisciplinary Engineering and Management and a Master of Business Administration, both from Clarkson University.
Prior to joining ATS, Mr. Hider gained CEO experience at Taylor Made Group, LLC where he had responsibility for all aspects of the
business. Mr. Hider has significant experience touching upon operations, manufacturing, sales and marketing, product management,
innovation, international business, service, quality, continuous improvement, and M&A. This experience was gained through
participation in an operational leadership program while at General Electric where he cycled through four different leadership roles,
and full P&L leadership positions at four different companies while at Danaher Corporation, those group companies being involved in
fuel management, application-specific X-ray analyzers, instrumentation, and motion technology. Some specific projects that Mr. Hider
led include acquisitions, brand rationalization, sales force execution, quality improvements, continuous improvement, strategy
development, and a successful acquisition of an SaaS business that enabled a total smart solution with hardware and cloud-based
software solutions.
1 10
Kirsten Lange
Ms. Lange, a German citizen, has more than 30 years of business experience in top management and in consulting across many of
the geographies ATS serves, including Germany and China. Most recently, she was the CEO of Fritsch Holding AG, a mid-sized German
machinery company. Before that, she served as a member of the Management Board of Voith Hydro, where she was responsible for
growing the Automation and Service divisions as well as for developing new digital business models. Previous to that, Ms. Lange spent
22 years with the Boston Consulting Group (BCG), based in Munich, Germany, where she worked as a Partner and Managing Director
with over 100 companies in sectors such as machine and plant construction, chemicals, automotive, energy, packaged consumer
goods and many more. During her time with BCG she spent two years in Shanghai, running the local office and developing the Chinese
market. Until recently, she has been a member of the Board of Directors and Audit Committee of Heidelberger Druckmaschinen AG.
Ms. Lange graduated from the University of Munich with a degree in Journalism and earned a Master of Business Administration from
INSEAD/France, where she is also teaching in the MBA program as Adjunct Professor.
Ms. Lange brings to ATS a broad skill set including: her experience as a CEO at Fritsch Holding AG, overseeing all aspects of the
business; direct experience in operations, manufacturing, sales and marketing, R&D/technology, and digital offerings at Voith Hydro,
where she was responsible for the after-market business, automation business, running a sales and marking organization, product
management of turbines, generators and complete power plants, and development of new digital offerings. At BCG, Ms. Lange gained
human resources experience, being responsible for career development in Germany and leading the European women’s initiative.
Having lived and worked in China for two years, and having spent several months in each of the USA, Russia, Brazil, Israel, U.K., and
Thailand (among others), Ms. Lange brings a unique international perspective. In addition to Ms. Lange’s exposure to financial matters
throughout her career, financial experience was also gained by way of an MBA specialization in corporate finance, and having been a
member of the Audit Committee of Heidelberger Druckmaschinen AG.
Michael E. Martino
Mr. Martino is a founder and principal of Mason Capital Management. Mr. Martino began his investment career at Oppenheimer & Company
where he was responsible for risk arbitrage research; he ended his tenure at Oppenheimer as Executive Director, Risk Arbitrage. He
began his business career at GE Capital Corporation where he held positions in information systems and business analysis. He was
formerly a director of Spar Aerospace Limited, a publicly-traded aerospace company. Mr. Martino graduated from Fairfield University
with a degree in Political Science and earned a Master of Business Administration in Finance from New York University’s Stern School
of Business. Mr. Martino currently serves as a chairperson of Mason Industrial Technology, a special purpose acquisition company.
Mr. Martino has gained over 20 years’ experience at a CEO level through his involvement in Mason Capital. Eight years at General
Electric exposed him to the manufacturing industry. Beginning at Oppenheimer & Company, Mr. Martino has worked in the capital
markets for the last 27 years. From an international perspective, Mr. Martino has been involved with U.S. and Canadian investments,
including holding board positions, and has overseen global investments throughout his career.
David L. McAusland
Mr. McAusland, the Chairman of the Board, is a corporate advisor, lawyer and experienced corporate director and senior executive.
Mr. McAusland is counsel to the law firm McCarthy Tétrault and was previously Executive Vice-President, Corporate Development and
Chief Legal Officer of Alcan Inc., where he provided leadership on its worldwide mergers, growth strategies, major transactions and
capital investments. Mr. McAusland currently acts as a director of Cogeco Inc., and Cogeco Communications Inc. Mr. McAusland is also
involved with several not-for-profit organizations and private companies. Mr. McAusland received his B.C.L. in 1976 and his LL.B. in
1977, both from McGill University. In 2002, he was awarded the Queen Elizabeth II Jubilee Medal in recognition of service to the
community, in 2015 he was conferred the title Advocatus Emeritus (Ad. E.) by the Quebec Bar and in 2020 he received the distinction
of Fellow of the Institute of Corporate Directors (F. ICD) by the Institute of Corporate Directors.
With his 40-year career, Mr. McAusland brings to ATS deep experience in the strategic issues facing a wide variety of businesses, both
domestically and internationally, based on a broad variety of perspectives including as a senior executive of a large multi-national
business, corporate director, lawyer and strategic advisor. Mr. McAusland is highly knowledgeable in all matters of corporate governance;
his roles as a corporate director go back over 20 years and include membership on human resource and compensation committees
as well as audit committees and roles as board chair. He has designed and led many high-value-at-stake strategic initiatives and
transactions, both friendly and contested as well as domestic and international, and he has spent much of his career with close
involvement in the capital markets and corporate finance issues and initiatives. Mr. McAusland also brings experience as a leader of
successful government relations initiatives and the development of strategies based on stakeholder alignment.
Philip B. Whitehead
Mr. Whitehead is an experienced business leader. He is currently Chairman Emeritus of Danaher’s European Board and Vice President
Corporate Development of the Danaher Corporation, a global science and technology company. Since joining Danaher in 1992,
Mr. Whitehead has held a number of executive and operational roles beginning with Managing Director of Veeder Root Europe. In
his current position he plays a major part in contributing to Danaher’s mergers and acquisition activity in Europe and supports the
corporation’s growth initiatives in selected high growth markets. Earlier in his career, Mr. Whitehead worked in senior sales and
marketing roles at Procter and Gamble, Hovis Marketing, and Unilever. He also operated his own management consultancy business.
Mr. Whitehead has a Diploma in Marketing, Accounting and Finance from Bournemouth College, U.K. Mr. Whitehead currently serves
as a director of Mason Industrial Technology, a special purpose acquisition company.
Mr. Whitehead is skilled in overseeing businesses, having held CEO/managing director roles at several public and private companies in
the U.K. and one in Switzerland. He has operations, manufacturing and lean operations experience through the many roles he has had
within Danaher group companies, including Veeder Root, Gems Sensors, and others. Mr. Whitehead’s capital markets experience was
gained from his involvement in the listing of Micrelec as a U.K. public company, serving as Chairman of Nobel Biocare whilst it was
publicly listed in Switzerland and through the many public to private deals completed as the lead on Danaher’s prolific M&A record
where he has been Managing Director of Corporate Development in Europe for the last 20 years. Mr. Whitehead sees his main skill set
as lying within sales and marketing where he has held many senior responsibilities, including Brand Manager at Procter and Gamble,
National Sales Manager at Unilever, and Marketing Director at Micrelec PLC. Internationally, he has had roles covering many
geographies, including EU, South Africa, Australia, Middle East, Russia, Turkey, Hong Kong and parts of Asia and South America.
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ATS AUTOMATION /// ANNUAL REPORT 2022 Shareholder Information
Corporate Headquarters
730 Fountain Street North
Cambridge, Ontario
Canada N3H 4R7
Tel: (519) 653-6500
Investor Relations Contact
David Galison
Tel: (519) 653-6500
Email: dgalison@atsautomation.com
Stock Exchange Listing
Toronto Stock Exchange: “ATA”
Registrar and Transfer Agent
Computershare Trust Company of Canada
100 University Avenue, 8th Floor
Toronto, Ontario
Canada M5J 2Y1
Website
www.atsautomation.com
Shareholders’ Annual Meeting
August 11, 2022
10:00 a.m. Toronto Time
Virtual-Only Meeting
Live webcast link will be available at
www.atsautomation.com
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ATS Automation
ATS Automation Tooling Systems Inc.
730 Fountain Street North
Cambridge, Ontario
Canada N3H 4R7
ATSAutomation.com