It took more than 20 years, but ATS Automation Tooling Systems Inc. (ATA-T) shares reached a record high on Wednesday after the company’s latest earnings well surpassed expectations. The company also reported record order bookings in its most recent quarter, as more companies turn to automation to lower costs and boost production.
ATS shares surged 13 per cent in Wednesday trading on the Toronto Stock Exchange, hitting a record $42.70. That beat its former high of $40.50 during the turn-of-the-century tech boom. The stock closed the day at $42.33. It’s up about 90 per cent so far this year and has risen by more than 130 per cent over the past 52 weeks.
Cambridge, Ont.-based ATS, which makes automated manufacturing systems used in sectors such as life sciences, consumer products and transportation, reported revenue of $510.6-million for its first-quarter ended June 27, up 57 per cent from $324.9-million a year ago, driven in part by acquisitions.
Profit was $33.9-million or 37 cents a share, compared with $9.8-million or 11 cents a year earlier. Analysts were expecting revenue of $460-million and earnings of 31 cents in the quarter, according to S&P Capital IQ estimates.
The company said its order bookings reached a record $637-million in the first quarter, with “notable project wins” in areas such as medical devices and EV battery assembly.
“Automation is clearly seeing strong demand drivers with the backdrop of inflationary costs, a tight labour market and supply chain disruptions, where companies are looking to drive efficiencies in the manufacturing process,” Stifel GMP analyst Justin Keywood said in an e-mail to The Globe. “New smaller packaging sizes to manage inflation, like in food and beverage, is also leading to greater automation demand.” The price of a product may be similar to what it was last year, he says, but now comes in a smaller size.
In a note to clients, Mr. Keywood said the company’s life sciences segment “remains robust” amid strong activity in the medical device and pharmaceutical markets. There are also more opportunities in the transportation division with the rise of electric vehicles.
The consumer products division is improving, Mr. Keywood noted, but said management “expects some customers to remain cautious in deploying capital in the current economic environment.”
Mr. Keywood raised his target for ATS shares to $51.50 from $45, reiterating a “buy” recommendation.
National Bank analyst Maxim Sytchev increased his price target to $48.50 from $38 after the earnings were released Wednesday while maintaining his “outperform” recommendation.
“We remain constructive on the name given tight labour backdrop ... strong end-markets, expanding multiples from peers with similar exposure, solid execution to date and further M&A capacity,” he said in a note.
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