Q2 2021 ATS Automation Tooling Systems Inc Earnings Call
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I'd now like to turn the call over to Mr. Mcgrath Vice President General Counsel. Please.
Please go ahead.
Thanks, operator, and good morning, everyone. Your main hosts today are Andrew Heiter, Chief Executive Officer of H.U.S., and writing Mcleod Chief Financial Officer before.
Before we begin a required to provide the following statement respect and forward looking information, which has made on behalf of HTS and all of its representatives on this call.
You are cautioned that the oral statements made on this call will contain forward looking information that involves risks and uncertainties, including those introduced by the COVID-19 pandemic.
The actual results could differ materially from a conclusion forecast or projection in the forward looking information certain material factors or assumptions were applied in drawing a conclusion or making a forecast or projection as reflected in the forward looking information.
Additional information about the material factors that could cause actual results to differ materially from the conclusion forecast or projection in the forward looking information and the material factors or assumptions Super applied in drawing a conclusion or making a forecast or projection as reflected in the forward looking information contained in HSS filings with Canadian provincial Securities regulators now it's my pleasure.
To turn the call over to Andrew.
Thank you Stuart.
Good morning, ladies and gentlemen, and thank you for joining us.
For the second quarter, we can do to continue to focus on our operations in this new environment health and safety of our employees and delivering on its for our customers.
Our second quarter featured increased order bookings and we finished with a strong order backlog.
Operationally, we continue to improve our performance in Chile.
Challenging business conditions.
In September we announced a reorganization plan for our transportation business that included the divestment of noncore assets.
Our teams have adjusted to the new environment and are delivering value for our customers, but cobot restrictions continue to revenues in the quarter.
Today I will focus on a few key topics update you on business conditions, and then Ryan will provide his report.
Starting with our financial value drivers Q2 revenues were $336 million down 2% for Q2 last year on lower services revenue due to travel restrictions and entry limiting since at some customer sites.
Our Q2, adjusted EBIT margin was 12% in one year.
Q2 order bookings.
$403 million.
26% from last year.
This includes a previously announced 20 billion dollar program for the design build delivery of automated safety syringe manufacturing systems.
These systems will support and demand for routine health care and to treat the surge of COVID-19 patients.
Moving to our outlook, we remain cautious as the pandemic appears to be far from over crude under Florida $956 million provides us with a solid base of business offset uncertainty in the short term.
We're encouraged with quarterly booking activity.
By market activity in life Sciences remain relatively robust and it couldn't do mandate Lady to cope in 19 responses.
Other activity in medical devices pharma and radio pharma has remained strong.
We want a number of orders that follow on current programs as well as orders from existing accounts the expanded titration with those customers.
Life Sciences represented over 65% of our year to date bookings, we expect it will be a strong market for us over the long term.
Maybe we have seen a regional differences in market development.
And your previous investments in E b capacity and a slowdown in end market demand that's caused customers to focus their efforts on cash preservations and re examine cap and timing.
In North America, So maybe opportunities are moving forward, but overall transportation market activity remains challenging.
In consumer conditions remain soft activity approved an opportunities and warehouse automation and food, which included contributions from Marco.
In energy, we continue to see activity in new color, including incremental demand for digital solutions and services.
Overall, our border remains healthy we expect customers to exercise caution given limited visibility on the future severity and duration of the pandemic and its economic impact.
And after sales services revenues were down year over year and this business has not yet recovered due to travel and facility entry restrictions that said sequentially. After sales service revenues were up double digits compared to Q1.
Q2 service bookings were up.
From both Q1 and Q2 last year.
Despite limitations created by cobot funnel activities for services is robust our regional networks and the use of digital support tools, including enhanced remote support have increased customer confidence as travel challenges continue.
Moving forward we're.
Focused on upgrade and maintenance opportunities and digital services to ensure customers can operate at high levels of productivity in this environment.
And the second quarter, we announced a reorganization plan to help offset an expected downturn in our transportation Mark.
By the pandemic.
This plan includes a closure of certain transportation facilities and workforce reductions primarily in Europe, and Asia and resulted in the sale of non core assets.
This will align our European capacity and cost structure to current and expected conditions in the transportation market.
Ryan will provide further details on cost and time.
Moving to the ATM.
We've adjusted training event methods to this new environment progress continues and we have many opportunities for improvement ahead to support our growth and margin expansion plans.
A few abiam highlights from the quarter virtually a boot camp held in Europe resulted in 14 ATM related events, putting two guidance.
The resulting improvements in process in daily visual management helped enable the delivery of critical projects to customers on time.
Good morning split shifts for the workforce to maximize safety of our employees and customers.
Another division conducted an event focused on streamlining the quoting process yielded a 10% reduction in process time, while improving quality.
We launched our commercial way beyond which focus is leaving our marketing and front end processes. This included the launch of our new Ats website and multiple marketing.
Season events. These efforts have resulted due to increases in our digital marketing funnel by 47%.
During restricted travel and trade shows this has proven to be instrumental and Ats in front of potential clients.
And it has resulted in our upcoming Ats automation virtual lifestyle, we're holding early December.
The virtual trade show was all Ats businesses, along with 38 of our growth suppliers presentations will include educational Webinars. So, we'll introduce participants to automation and our core capabilities.
Hope you will join us for this event.
To further tie kaizen events to progress a year ago, we held an event that advanced the development.
Critical sustainability initiatives.
Our process to find what matters to our employees customers and shareholders and ensuring the sustainable performance of our company.
As a result of that work, we published our first annual sustainability report this week throughput.
The report highlights many of the policies and practices that shape and guide our efforts.
Provides data on our initiatives and performance it outlines our ongoing commitment to improve this.
This is an exciting milestone in our sustainability journey and I encourage you to review the report which is available on our website.
Moving forward, we will continue to report understood sustainability commitments annually.
Turning to innovation.
We completed the commercial launch of Symphony.
Digital manufacturing technology that improves productivity automated assembly processes. It builds on the rapid speed matching technology that we acquired last year from Transformers.
Symphony increases our Capex life Sciences, and other vertical markets and is a key feature in the 20 million dollar order, we secured for automated syringe manufacturer.
The development and deployment of our digital service offerings are progressing as well. These products are ideally suited to the cobot environment and will serve customers well as they optimize their production processes and looked at Ats to rapidly supply their needs for service and parts.
We continue to prioritize investment innovation.
We recently completed work on our new Ats Innovation Center state of the art home for our team.
This is a significant accomplishment for Ats and the team have supported the build.
The innovation team is working on next generation ideas that will enable solution to positive positively impact our customers.
We've also been recognized for our efforts in the second quarter process automation group, one the Fiat's Chrysler group Capex supplier of the year.
I'm proud of the team's efforts to ensure customer success and to achieve this recognition.
Each of these initiatives initiatives demonstrates the innovative nature of our people and our ongoing strategic focus on creating value.
Moving to M&A.
Acquisitions have been and will continue to be an important element of yes. This growth.
We have a good pipeline of prospects that is in throughout the year.
As I've outlined in the past, we evaluate patients based on four criteria the market the strategic value of the target how do you integrate and operate the target and I'll quickly, we can implement the business model and finally, the financial return.
We have been engaged and continue to cultivate key areas of interest of course timing to be variable in our approach to deploying our balance sheet will be disciplined and strategic.
In summary, our.
Our second quarter performance demonstrate the resiliency of our workforce and delivering commitments.
Our continued strength in bookings reflects the alignment we have with our customers and providing best in class solutions.
We admitted just operate in this new climate and continue to provide value for our customers.
Going forward, we have a strong business with good backlog healthy balance sheet, and our ATM playbook that will enable us to create long term value.
We are focused on putting our business in a position to succeed through this challenging period and emerging in a stronger position.
Now I will turn the call over to Ryan Ryan.
Thank you, Andrew and good morning, ladies and gentlemen.
Our second quarter performance featured year over year and sequential improvement in our order books.
Revenues and operating margins, both improved over Q1, but were lower than last year.
This morning, I will discuss our Q2 results the reorganization, including timing and impact and provide an update on our balance sheet.
Starting with operating results.
Our Q2 bookings were $403 million up 26% compared to bookings of $321 million last year.
The year over year increase primarily reflected new orders and life Sciences and consumer core.
Acquired companies and foreign exchange positively impacted orders by 4% and 3% respectively.
Compared to Q1 order bookings were up 24%, reflecting continued strength in life sciences and improvements in transportation consumer synergy.
Year to date bookings were $728 million with a book to bill ratio of 1.1 to one.
Q2 revenues declined 2% from last year to $335.5 million.
Organically revenues decreased 7%, primarily reflecting lower after sales services activity due to travel restrictions and limitations on access to certain customer facilities.
Card companies and foreign exchange provided a partial offset positively impacting revenues by 2% and 3% respectively.
Sequentially revenues increased 3%, 3.3% from Q1.
Primarily reflecting improved after sales service revenues, we call April and May service activity was impacted by the pandemic.
Our Q2, ending backlog of $956 million provides us with a solid base to mitigate some of the economic fallout of the pandemic.
Of note life Sciences represented 61% of our period end order book well over market verticals have been impacted by the pandemic life Sciences has been more resilient.
Approximately $10 million of a reported order backlog relates to a previously disclosed customer project on hold.
Looking forward our revenue conversion for Q3 is estimated to be in the 35% to 40% range of backlog.
Well, we are more comfortable in are able today than we were last quarter the resurgence of covert in many geographies.
Due to uncertainty in the economy may impact the timing of customer decisions.
Continue to operate with almost half of our workforce at home and the presence of extra health and safety measures in our facilities both of which caused inefficiencies.
Moving to margins Q2, gross margin was 27.2% up from 26.3% last year, despite lower after sales services activity.
Higher gross margin reflected the benefit of the Canadian emergency, we'd subsidy, which positively impacted gross margins by approximately $2.7 million and improvements made in their cost structure and good program execution.
Going forward, we expect continued pressure from operating inefficiencies and challenges getting after sales services work in this environment.
Moving does Tonight on an <unk> basis, which excludes acquisition related amortization and restructuring charges Q2's, SGN $8 million to $50.1 million was 2 million higher than Q2 last year.
Higher SGN, a reflected incremental costs from acquired companies and the translation of foreign subsidiaries costs, partially offset by a 1 million dollar benefit from the Canadian wage subsidy.
So the reorganization we announced in September. This plan is intended to help mitigate the impact of it.
In the transportation market due to Covance.
Total restructuring costs are expected to be approximately $14 million, which is down from our initial estimate of $24 million, reflecting the recently completed sale of assets and transfer of employees from our German based subsidy to the buyer.
$8 million was incurred in Q2 with the balance expected to be incurred in our third fiscal quarter.
The $14 million expected costs, approximately $5 million or non cash expenses.
Second quarter stock compensation expense was $1 million up from a 1 million dollar recovery in Q2 last year.
Our effective tax rate was 24 cents in the quarter consistent with our expectations.
Finance costs were up by $1.3 million in Q2, primarily.
Primarily due to the $250 million cash draw on our credit facility, which was repaid during the second quarter.
Q2, adjusted EPS was 26 cents down from 29 cents last year.
Revenues increased DUS unit and higher stock compensation expenses.
For the decrease.
Moving to the balance sheet in Q2, we generated cash from operations of $20.3 million compared to 57.6 million last year year to date, we have generated cash from operations of $67.3 million up from $17.6 million last year, primarily reflecting the timing of investments non.
Cash working capital.
Our cash collections remained strong reflecting the strategic relationship you have with their customers.
Our non cash working capital as a percentage of revenue, 13.1% in Q2 up from 12% in Q1.
Timing of deposits and program milestones caused the increase.
Based on the strength of our bookings in Q2 and the payment terms on those programs I expect that we will working capital as a percentage of revenues below 15% in the short term.
We invested $5.7 million in Capex and intangible assets in Q2 down from $13.2 million last year higher since last year related to the expansions of certain facilities.
As a reminder, as planned our Capex budget. This fiscal year is in the range of $30 million year to date, we have spent 11.5 million.
From a standpoint, we finished the quarter with a net debt to adjusted EBITDA ratio of 1.3 to one we have further room to deploy capital to pursue our strategy within our normal course target levered leverage range of up to two to two and a half times.
We ended the quarter with good liquidity, consisting of cash of $163 million and availability on our credit facility approximately $750 million.
In the second quarter, we amended our primary credit facility extended its maturity to August of 2022.
Combined with the 23 U.S. dollar bonds, we have adequate credit availability for the next several years.
In summary, our second quarter featured strong performance by our business despite the difficult environment.
Our teams have done an excellent job in meeting customer needs, while maintaining a safe working environment.
The investments we've made in our operations, including innovation capacity for life Sciences business or services organization and training our people in ATM and continuous improvement will serve us well as conditions normalize.
The reorganization activity will improve our cost structure to manage through this environment and enable us to focus our investments towards higher return generating businesses.
We have a healthy order backlog strong balance sheet and available liquidity the combined to provide us with a solid foundation to pursue our growth strategies.
Now we will open the call to questions from our analysts operator could you. Please provide instructions. Thank you.
Ladies and gentlemen, we will now conduct a question and answer session.
A lot of money to be heard as possible. Please limit yourself to two questions per turn.
You have a question. Please press star followed by the number one I'm just touched on phone your questions will be pulled in the order. They are received please I'm sure you lift your handset if you are using a speakerphone defocusing entities.
Our first question is from Mark level with Scotiabank. Your line is open.
Hey, good morning, guys.
Theres Mark.
Good morning, first off great quarter, UBS well Doug.
If I can start on the margin growth.
Gross margins up 280 basis points quarter over quarter.
I'm, just sort of I guess im just trying to understand how much of that is mix, whether it be life sciences or greater aftermarket work launches from past restructuring I guess, what ultimate ultimately trying to get out here is sort of the good starting points for going forward or is there something that may cause that to step down a bit.
In coming quarters.
Yeah. So so again good morning, Mark I'll walk through.
Some of the factors that that has.
Kind of impacted our Q2 margins versus Q1.
So first on the negative the wait and see what is was down in the quarters pipe it just under $3 million.
On the positive side, we did have.
More services work quarter, so I talked a little bit last quarter, and this quarter and how April and May were particularly.
Difficult from a after sales services stamp.
So that was a positive contributor to for Q2 margins and then the.
The rest was was really good program management.
Rob.
Volume and in the improvements we've made to our cost structure and if I were to quantify.
The services was about a third of the increase versus.
Versus Q1, and the balance would be.
Brand management volume and improvements to our cost structure.
Okay.
See I guess that you don't want to think about going forward.
It's a life sciences six members on your business aftermarket keeps growing you.
You get more scale or you leverage.
And with the with the higher volumes, even for the coming quarter.
There's no reason to think whether it be a significant step out.
Well, I mean, I'm not going to provide.
Our guidance on our margins going forward, but.
You know the the factors I walked through so the wage subsidy, we will see a decrease this quarter.
Services.
It's still a challenging environment to execute award for fried chicken.
And after sales services.
You don't program management, Yes, I expect thats going to continue to be strong going forward.
Yep.
That's very.
Interconnects your question maybe on the restructuring.
I got I can appreciate there's some weakness in transportation, but I guess, our view is that it's not structural and exposure to eases. The good thing and maybe having capacity there would be a good thing. So maybe just your thoughts around or maybe just comments around that yes.
Again, it's not a year from now it's the markets the automotive markets will be back in they got eighties keep growing as are so if any risks that maybe you don't have enough capacity.
Yeah Yeah.
Yeah. So markets are saying. This is this is not an exit from maybe more specifically actually it's in a limit to what we do best GDP, what you sell the module and module to pack assembly and aligning around that the specific division or divisions that were impacted primarily the one in Europe.
With a traditional ice business and they had done call. It with a couple of customers. Some some easy work and when we looked at the ice impact and we looked at what was going on in Europe, We really right size the region for what we view as the potential for that for that space and so to summarize we don't view this as a limitation going forward and.
For the relationships that we want to keep we're going to continue to keep.
Okay. If I can just ask one last question just before getting back and you're just on capital allocation again, I'm just curious about sort of what your thoughts are on the buyback with the stock being where it is I'm not sure what that this morning, but stock where it is and maybe just on again on M&A you provided some commentary but suggests.
Maybe ask in your your appetite for actually doing something sort of in this environment.
Not just cultivating.
Thanks.
Yes, so some markets are.
We do I mean, as you're aware of the NC I'd be in place and we've been active in employing that tool.
And that will continue.
Sorry, just on M&A well sort.
No. That's the NCS it will continue and it's coming up for renewal and and assuming we've got alignment with the board we will plan to continue that.
As far as far as M&A March I mentioned it in my opening comments. It is it is an area that we are focused on a continued to be an important element at HSN and we have a good pipeline that has increased some of the interesting dynamics of the coated pandemic is the shift to to video calls.
And the ability to cultivate through that has actually increased a lighting schedules is always a challenge and I would say that we've we've increased and we are we have a healthy funnel and and an executable funnel and so we are going to be true to our four which is the market the strategic value.
How do you integrate and operate and financial return but.
But we are ABSSSI lined and and you know as a starting point.
We view Ats is footprint as being a key enabler here when when we see an opportunity and whether it's Europe or North America or Asia, we have the ability to be onsite as we've got a footprint in the region.
And it really does set us aside and allows us to really cultivate and or assess the business.
One last one and I forgot to mention this additionally, I fill white head who is on our board has been named chair of the strategic Committee focused on M&A and that's also a really really been helpful and aligned with where we want to drive this and so we're really pleased with that change in its and its continuing.
One of our focus in an efforts.
Hey, Thanks, guys appreciate it.
Your next question comes from Justin Keyword with Stifel GMP. Your line is open.
Good morning, and thank you for taking my call a nice to see the resilience of the business in the quarter.
Thanks, Good morning, Justin morning, Justin.
I had a question on the order bookings there was mention of.
Some related to it for the fight over 19 I'm just wondering how repeatable are these orders just in the cold in 19 areas like does the funnel activity remained robust.
Yes, so I'll take this in a couple ways. That's in first the funnel activity is robust we don't we don't characterize how you know signage of our funnel, but it is it is a meaningful percentage of the life Sciences funnel.
Second it.
It's it's a dynamic area because as we look at the syringe manufactured process. This is norm. This could be considered normal course, and the fight against cobot and so.
We view that as an area that we say we can we can help regard this with these customers on whether they're they're increasing their output reducing their supply chain risk onshoring or in the fight cobot and so this really plays to the area that Ats does best and as a reminder, our key areas are.
First our technology innovation second our experience.
Third our ability to execute.
The project, we announced early in the year that went from 40 weeks down to 14 and up and running.
It's just a testament to the team's engagement and then and a footprint is also a key element because customers look for support over the life of the equipment and so.
We view this as an attractive area, but we also view this area is playing to what Ats does best and we view this is a continuation.
Absolutely understood and then on the services.
Thank you it seems to me, there's a few moving parts.
Yeah, there is some pressure and the revenue but theres.
Theres mentioned up the funnel and backlog remains robust.
And I assume that the equipment has to be serviced at some point so like just looking kind.
Kind of into next year is there going to be an inflection point, where maybe that that revenue starts to trend back up to the double digit growth area or.
What the restrictions in place does it still remain a bit unclear when that will happen.
So I'll start with just and.
Restrictions do create it and our view is is you know.
I know I mentioned this on a call earlier one of the things we realized early on in the pandemic was the inability to travel and we launch.
Our remote support tool.
We've got so many customers that are aligned around that and it helps them continue their process, but then also ats to support we.
We view that this is a business that's going to get back on track timing is going to be variable and I'm not here to call. The pandemic timing what I can tell you is really sales bookings quarter for this section of the business.
Funnel remains healthy.
And we're going to continue to overcome obstacles to support our customer base.
And maybe just to just hang onto that as well some of the service work. We booked this quarter is refurb work.
And that that can either be done on there can be shipped back to our facility and done in one of our facilities, which is.
Which is the case so.
So that's another area of the business that that's as director of the services business, specifically, that's not as direct acted by by travel restrictions today.
Mhm.
Thank you that's helpful. Those are my two questions.
If you would like to ask a question. Please press star followed by the number one on your telephone keypad.
And we do have another question from Mark Nova Scotia Bank. Your line is open.
Hey, guys I'm going to follow up on the the aftermarket discussion.
After after sales service.
You have a rough sort of estimate for us how much of that business would be parts versus.
Remote or digital or a soft list.
So I believe.
I believe parts is going to be less than 25% of that number.
And and digital is going to be something less than that as well.
And the remainder would be what.
Oh, the remainder would be would be onsite support refurbishment work modifications.
<unk>.
So.
Thanks, guys.
Your next question is from Maxwell Clawback.
Line is open.
Hi, I just quickly on on the conversion when you look at the backlog and I know you don't usually go into different.
The conversion of that backlog on a segmented basis, but when you go back and look at it.
There's been some change I am wondering if that's sustainable future like in terms of the amount of revenue that you're getting out of the back that that you're getting out of consumer for instance, and and das and the lower levels that you see in life Science I guess, it's understandable given how the different sizes and how much those are change but I'm.
Wondering if you could speak a little bit about the nature of the business and whether that there's something permanent we changed here because of the nature of the orders you got.
So so.
So there is theres nothing permanent I mean, our backlog conversion is really driven by the specific backlog projects, we have in backlog and and the timing of those projects. So.
When we have when we have larger enterprise orders some of those can be well the team even 24 months.
In consumer.
Specifically, we do have some shorter duration projects in that backlog that we've had over the last couple of quarters.
But what I wouldn't see any of this is permanent and it's really just some.
Of the orders that we're we're executing at any given time.
Okay, Okay, so and I I thought perhaps that the nature of some of the life Sciences order. There may have been sort of a need to expedite that whereas maybe some of the other work would have been.
You know you talked about 10 times that the classifier timing being pushed out in time sensitive.
But I guess, we should we should look at it more on a yearly basis I know, we should kind of get into each quarter, but I just curious because it's relatively consistent up until the last.
The last couple of quarters.
So so certainly the last.
Couple of quarters with some of the cobot related programs and Andrew talked about the test kit order that was executed in 14 weeks I mean, that's that's a very unusual schedule.
So so there has been some of that recently, but but you're right. There is in terms of looking.
Specific quarter, there's nothing from a from a change in business or permanent trend that I would draw from this.
It's best to look at this over the long term yeah, and then just a follow up on that.
Is there an implication on margins when that happens like do you recoup.
Any additional cost to sort of deliver more quickly than you would normally normally be able to are normally scheduled due to that Jane do you bear more cost to that or did you pass that through in the contract right.
Well so so there is no additional.
I'm not sure if I'm going to exactly answer your question here, but there is no additional costs.
Based on the size of a project or margin difference necessarily if we're accelerating a project there might be additional costs related to working.
Working two shifts or deploying.
Deploying additional people on it.
But but those would be factor to the bid.
I mean overall efficiency standpoint, the quicker we can get projects in get them through our factory new customers. There is a benefit to that of course, but but from a specific project.
Basis. It all gets factored in when we're we're bidding on the work.
And at times Mac, there is areas, where they'll have an early delivery.
Through the programs, but it's certainly something that we would we would drive to ensure we've got a lot of before you know before we would move forward on the contract.
And then just following up on the on the whole.
<unk> business model and that the changes that they been made there.
This new way of operating that Youve that you had to deal with the last couple of quarters. It do you do you expect the pace of like the kaizen events or any continuous improvement do you expect that there may be an effect down the road.
Less of those less impact from nodes and that benefit from those or or or do you expect that the changes that had been Naples will allow you to continue at the same pace.
Yeah. So so [laughter], obviously I'm not going to provide future guidance here, but what I can tell you is this team is just adapted and continues to adapt to overcome obstacles.
To talk a little bit about it in my opening remarks remarks around the commercial aviation and boy its just exciting times to watch how the team aligned around that but he drives to the key metrics and I just utilized one metric, but 47% digital marketing funnel increase.
And yet it's certainly a starting point was was low but the team is very focused on execution and so I would say it took us a little bit to understand how to do virtual kaizens and adapt but when I say a little bit we overcame those obstacles very quickly and aligned around the two areas.
And we're now holding Bootcamps, we're now holding kaizen events without holding AG.
Global global events, where we can really maximize our performance.
And I guess following on to that the.
Potential then is that even with even if things were to go back to normal there.
There's probably a lot of things.
That you'll probably we retain it might actually be allow you to be more efficient and the teachers that do you feel the same way.
I do I do and I know I'm pointing to this again, but the commercial aviation piece is the area and and our sales team is.
They do a mix up selling ats and ensuring that the value we bring to customers is aligned to their needs and this is only going to help them and so we've got a great team and they continue to focus on welfare.
Yeah.
Excellent thanks, guys.
Your next question is from Maxim Sytchev with National Bank. Your line is open.
Hi, good morning, gentlemen.
Good morning, Matt.
Andrew now that you know what we're getting close to a two years on commerce or I'm. Just wondering if you don't mind will be sort of sharing some.
So I want to take away from that transaction I don't unless you're willing to discuss some financial metrics and maybe provide a bit of an update regarding the.
Hi, radio pharma market in general as possible. Thanks.
Yeah, I'll start and then I'll certainly turn it over to Ryan to add here.
So a couple of things and you know backs one of that we've grown very comfortable on and it is our ability to integrate and you know it was one of the bigger acquisitions since I've been on.
And alignment to integration, ensuring that we can maximize the value with lesser and as a reminder, the thesis going in the reason why we really love. This business is not only that the radiopharmaceutical space. But then also the team to work with a T.S. on joint projects and.
What I can tell you which is a.
They're at or above expectations as well.
Well when you look at the radio pharma market. It continues to have attractive aspect.
One of the lessons learned I would say is we didnt really exploiting the market as well as we should have around cancer treatment and cancer identification and the growth.
Isotopes that impact that space and really align so so people can understand the way that common share really provides value into the pace around isotopes run identification and then ultimately treatment.
They continue to be the leader and they're growing at a very fast pace within that area, but then additionally, and this will be my last point before I turn it over to Ryan is a life around this the same aseptic filling and.
Announced the joint win with a T.S. we.
We really don't have the ability to announce the customer was a very big win and we view that theres theres follow on work in and I've been in meetings with customers on these follow on opportunities that really aligns to how we wanted to move with the business. So.
All in all were very positive progress very pleased with the performance and it really is built our capex and a lot of lessons learned through the integration, but but really taken those into to future acquisitions, Brad anything you would add to that to my update well.
Well I'm not going to get into too many specifics but.
Their bookings have grown double digits, particularly on strength in North America, which was a large part of our thesis when when we bought the business and their margins have expanded as well and it's been a combination of operational efficiencies.
Good progress on supply chain and this.
This team has really really adopted in the Ats business model and done a really good job.
Moving the financial performance over the last 18 months.
Okay. That's that's super helpful and agreed I mean, obviously, an excellent asset and maybe I'm just closed.
Closing goober around M&A.
Any color because I think the last time, we spoke there's a bit of a gap between what the sellers are willing to accept in terms of multiples of what.
Forward EBITDA, they feel comfortable with.
Where's that discussion point now I, we're getting closer to sort of meeting somewhere in the middle or how would you characterize these conversations.
I mean.
Like our funnel is healthy here and we've got a lot of conversations going on and what I can tell you is multiples for for good assets could continue to be at a decent level and what I can state is that we've got the four variables that we align around and ensuring that the financial return is one of them and our team is.
Max when I first came on were building out our team at corporate to to really enable and drive M&A and engage and go through the process and Weve got CPI is around this further that we really started to align the business units to cultivate and those are some of the best cultivators, because they get and engage with businesses in areas that we.
We want to target in markets, we want to target and so I.
I would view that as a strength for us moving forward and it's got to be something that we continue to leverage as we as we build out this plan.
Okay fair enough. Thank you.
And now I'd like to ask a question. Please press Star then the number one on your telephone keypad. Your next question is from Justin Keewatin Stifel JMP. Your line is open.
Hi, I just had a question of clarification the reduced restructuring charge from 25 to 14 million does that include any cash in the door from the divesture or is that a county those separately.
That includes the cash proceeds from these the assets we sold yes.
Okay and that number that's.
Do you anticipate any other changes or that's pretty.
Pretty sound as it is.
At this time I don't anticipate any changes to that number.
Okay. Thank you appreciate that.
Welcome.
Mr. Han you there are no further questions at this time please continue.
Thanks, Operator, I look forward to reporting our Q3 results in February, but I want to take a moment.
State I can't be more proud of the great work the age is doing and it certainly shows in our results. Thank you for joining us today stay safe and goodbye for now.
This concludes today's conference call you may now disconnect.
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