ATS Automation Tooling Systems Inc. reported unaudited consolidated earnings results for the second quarter and six months ended October 2, 2016. For the quarter, the company reported revenues were CAD 242.5 million, 8% lower than a year ago, primarily reflecting the timing of project activities. Earnings from operations were CAD 17.3 million (7% operating margin), compared to CAD 24.4 million (9% operating margin) in the second quarter of fiscal 2016. Adjusted earnings from operations were CAD 22.3 million (9% margin), compared to CAD 31.7 million (12% margin) in the second quarter a year ago, primarily reflecting lower revenues and increased stock compensation expenses. EBITDA was CAD 25.3 million (10% margin), compared to CAD 33.7 million (13% margin) in the second quarter of fiscal 2016. Earnings per share were 9 cents basic compared to 14 cents basic a year ago. Adjusted basic earnings per share were 13 cents for the second quarter of fiscal 2017 compared to 19 cents a year ago. Fiscal 2017 second quarter revenues were 8% lower than in the corresponding period a year ago, primarily reflecting the timing of project activities. Foreign exchange rate changes did not materially impact the translation of revenues earned by foreign-based subsidiaries compared to the corresponding period a year ago. Net income was CAD 8.5 million or CAD 0.09 per basic and diluted share against CAD 12.8 million or CAD 0.14 per basic and diluted share a year ago. Income before income taxes was CAD 10.9 million against CAD 4.2 million a year ago. Adjusted income before income taxes was CAD 15.9 million against CAD 24.3 million a year ago. In three months ended October 2, 2016, cash flows provided by operating activities were CAD 3.8 million (CAD 20.3 million used in operating activities in the second quarter a year ago). The increase in operating cash flows related primarily to the timing of investments in non-cash working capital in large customer programs. Acquisition of property, plant and equipment was CAD 2.443 million against CAD 2.640 million a year ago. Acquisition of intangible assets was CAD 1.835 million against CAD 1.669 million a year ago.

For the six months, the company reported revenues of CAD 507.8 million against CAD 518.0 million a year ago, revenues for the six months ended October 2, 2016 were 2% lower than in the corresponding period a year ago, primarily reflecting the timing of project activities. Foreign exchange rate changes positively impacted the translation of revenues earned by foreign-based subsidiaries compared to the corresponding period a year ago, primarily reflecting the weakening of the Canadian dollar relative to the U.S. dollar and Euro. Earnings from operations were CAD 39.9 million (8% operating margin) compared to CAD 41.9 million (8% operating margin) in the corresponding period a year ago. Excluding CAD 10.3 million related to amortization of identifiable intangible assets recorded on the acquisitions of PA, IWK, and sortimat, adjusted earnings from operations were CAD 50.2 million (10% operating margin) in the first six months of fiscal 2017, compared to adjusted earnings from operations of CAD 59.1 million (11% operating margin) in the corresponding period a year ago. Lower adjusted earnings from operations primarily reflected lower revenues, and higher selling, general and administrative expenses. Year-to-date fiscal 2017 EBITDA was CAD 56.8 million (11% EBITDA margin) compared to CAD 62.4 million (12% EBITDA margin) in the first six months of fiscal 2016. Net income was CAD 20.6 million or CAD 0.22 per basic and diluted share against CAD 22.6 million or CAD 0.25 per basic and diluted share a year ago. Adjusted basic earnings per share were 30 cents in the six months ended October 2, 2016 compared to 37 cents in the corresponding period a year ago. Income before income taxes was CAD 26.9 million against CAD 30.1 million a year ago. Adjusted income before income taxes was CAD 37.2 million against CAD 47.3 million a year ago. In the six months ended October 2, 2016, cash flows provided by operating activities were CAD 61.3 million (CAD 29.5 million used in operating activities in the corresponding period a year ago). The increase in operating cash flows related primarily to the timing of investments in non-cash working capital in large customer programs. Capital expenditures totaled CAD 4.3 million for the first six months of fiscal 2017, primarily related to computer hardware. Intangible assets expenditures were CAD 3.3 million for the first six months of fiscal 2017, primarily related to computer software and various internal development projects. Adjusted basic earnings per share were CAD 0.30 against CAD 0.37 a year ago.

For the Fiscal 2017, effective tax rate is expected to be below 25% of earnings.